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Corporate Entrepreneurship: The role of middle-level management on Corporate Entrepreneurship within the telecommunications industry in South Africa.
S t u d e n t n u m b e r : 7 9 4 8 5 9
S u p e r v i s o r : P r o f . B . U r b a n
J o h a n n e s b u r g , 2 0 1 5
( M a r c h 2 0 1 5 )
Andre Engelbrecht
A research report submitted to the Faculty of
Commerce, Law and Management, University
of the Witwatersrand, in partial fulfilment of the
requirements for the degree of Master of
Management in Entrepreneurship and New
Venture Creation
Corporate Entrepreneurship: The role of middle-level management
on Corporate Entrepreneurship within the telecommunications
industry in South Africa.
Andre Engelbrecht
A research report submitted to the Faculty of Commerce, Law and Management,
University of the Witwatersrand, in partial fulfilment of the requirements for the
degree of Master of Management in Entrepreneurship and New Venture Creation
Student number: 794859
Supervisor’s name: Prof. B. Urban
Johannesburg, 2015
(March 2015)
I
ABSTRACT
Guth and Ginsberg (1990) stressed that Corporate Entrepreneurship (CE)
encompasses two major phenomena: new venture creation within existing
organisations and the transformation of on-going organisations through strategic
renewal. Zahra (1991, p. 262) observed that Corporate Entrepreneurship may be
formal or informal activities aimed at creating new business in established
companies through product and process innovations and market developments.
The research study was quantitative and data was collected through an online
questionnaire, which used closed-ended questionnaires. The questionnaires entail
assessing the degree of CE within the telecommunications industry in South Africa.
The analysis involved 172 samples of responses to the online questionnaire.
The research indicated that that there is a correlation between the dependent
variable (entrepreneurial orientation) and the independent variables (innovation,
performance, risk taking, and pro-activeness).
The findings of the research contribute to the South African telecommunications
industry in terms of innovation, regulation, external collaboration and entrepreneurial
orientation literature and studies.
II
DECLARATION
I, Andre Engelbrecht, declare that this research report is my own work, except as
indicated in the references and acknowledgements. It is submitted in partial fulfilment of
the requirements for the degree of Master of Management in Entrepreneurship and New
Venture Creation in the University of the Witwatersrand, Johannesburg. It has not been
submitted before for any degree or examination in this, or any other, university.
-------------------------------------------------------------
Andre Engelbrecht
Signed at Wits Business School, JHB
On the …………………………….. Day of ………………………… 2015
III
ACKNOWLEDGEMENTS
The research has added new insights to my understanding of Corporate
Entrepreneurship within the telecommunications industry in South Africa. It has also
added to my own personal growth.
I wish gratefully to acknowledge valuable contributions and input from the following
people and institutions. Without their assistance this study would not have been
possible:
To my supervisor, Prof. Boris Urban, for his encouragement, guidance and support
through every stage of my research study;
Lecturers from the Faculty of Commerce, Law and Management at Wits Business
School (WBS) for their willingness to assist and give sound advice;
To the companies within the telecommunications industries who allowed their staff to
be part of the research;
My parents for their endless support and encouragement;
My fiancé for her continuous support and encouragement;
Respondents for sacrifices made and expert advice;
To my work colleagues for their support and assistance.
Finally, I would also like to thank all my friends and fellow students for their support
and encouragement.
IV
TABLE OF CONTENTS
ABSTRACT……………………………………………………………I
DECLARATION……………………………………………………….II
ACKNOWLEDGEMENTS……………………………………………III
CHAPTER 1: INTRODUCTION…………………………………….10
1.1 PURPOSE OF THE STUDY………………………………………………............10
1.2 PROBLEM STATEMENT…………………………………………………………..11
1.3 SIGNIFICANCE OF THE STUDY…………………………………………………12
1.4 DELIMITATIONS OF THE STUDY………………………………………………..13
1.5 DEFINITION OF TERMS…………………………………………………………...14
1.6 ASSUMPTIONS…………………………………………………………….............15
2 CHAPTER 2: LITERATURE REVIEW………………………….16
2.1 INTRODUCTION…………………………………………………………………….16
2.2 CORPORATE ENTREPRENEURSHIP DEFINITION…………………..............19
2.2.1 INNOVATION………………………………………………………………………20
2.2.2 PERFORMANCE………………………………………………………………….22
2.2.3 RISK TAKING AND PRO-ACTIVENESS……………………………………….23
2.3 THE NEED FOR CORPORATE ENTREPRENEURSHIP.................................25
2.3.1 THE MODEL OF MIDDLE-LEVEL MANAGERS‟ ENTREPRENEURIAL
BEHAVIOUR……………………………………………………………………………...38
2.3.2 FACTORS THAT INFLUENCE CORPORATE ENTREPRENEURSHIP……42
2.3.3 MANAGEMENT SUPPORT FOR CORPORATE ENTREPRENEURSHIP....45
V
2.3.4 DOMINANT LOGIC OF CORPORATE ENTREPRENEURSHIP……………45
2.4 THE GROWTH OF CORPORATE ENTREPRENEURSHIP IN SA……………47
2.5 THE SOUTH AFRICAN TELECOMMUNICATIONS UPDATE…………………53
2.6 THE MOBILE ECONOMY………………………………………………………….60
2.7 8 CONCLUSION OF LITERATURE REVIEW…………………………………...63
CHAPTER 3: RESEARCH METHODOLOGY……………………..66
3.1 INTRODUCTION……………………………………………………………………66
3.2 RESEARCH METHODOLOGY/PARADIGM…………………………………….67
3.3 RESEARCH DESIGN………………………………………………………………69
3.4 THE EXPERIMENTAL DESIGN…………………………………………………..70
3.5 POPULATION AND SAMPLE……………………………………………………..71
3.5.1 POPULATION…………………………………………………………………….71
3.5.2 SAMPLE AND SAMPLING METHOD………………………………………….72
3.6 PROCEDURE FOR DATA COLLECTION…….…………………………………73
3.7 THE RESEARCH INSTRUMENT…………………………………………………73
3.7.1 THE STRUCTURAL EQUATION MODEL……………………………………..75
3.9 THE PROCEDURE FOR DATA COLLECTION…………………………………79
3.9 DATA ANALYSIS AND INTERPRETATION……………………………………..80
CHAPTER 4: PRESENTATION OF THE RESULTS…………….82
4.1 INTRODUCTION……………………………………………………………………82
4.1.1 RELIABILITY………………………………………………………………………83
4.1.2 VALIDITY…………………………………………………………………………..83
4.1.3 ASSUMPTIONS OF THE STUDY………………………………………………83
VI
4.1.4 GROUP COMPARABILITY………………………………………………………84
4.1.5 TESTING THE HYPOTHESIS…………………………………………………...84
4.2 SAMPLE DESCRIPTION…………………………………………………………...85
4.2.1 ORGANISATIONAL CHARACTERISTICS……………………………………..85
4.2.2 STATISTICAL ANALYSIS OF VARIABLES…………………………………….92
4.3 SUMMARY OF RESULTS………………………………………………………....106
CHAPTER 5: DISCUSSION OF THE RESULTS……………….110
5.1 INTRODUCTION……………………………………………………………………110
5.2 DISCUSSION OF RESULTS………………………………………………………110
5.2.1 STATISTICAL ANALYSIS OF THE STUDY…………………………………...110
5.2.2 FIRST RESEARCH PROBLEM…………………………………………………112
5.2.3 SECOND RESEARCH PROBLEM……………………………………………..112
5.2.4 THIRD RESEARCH PROBLEM…………………………………………………113
5.3 CONTRIBUTIONS OF THE STUDY………………………………………………113
5.4 IMPLICATIONS FOR THE TELECOMMUNICATIONS INDUSTRY…………..116
5.5 LIMITATIONS OF THE STUDY……………………………………………………118
5.6 RECOMMENDATIONS FOR FUTURE RESEARCH……………………………118
VII
REFERENCES…………………………………………………………………………..120
APPENDIX A…………………………………………………………………………….129
APPENDIX B…………………………………………………………………………….136
APPENDIX C…………………………………………………………………………….137
APPENDIX D………………………………………………………………………….....140
VIII
LIST OF TABLES
Table 1: South African Messaging trends……………………………………………….55
Table 2: Telecoms market context……………………………………………………….56
Table 3: Forecast of mobile and fixed subscriptions and revenue……………………59
Table 4: Gender distribution of the respondents………………………………………..86
Table 5: Distribution of respondents‟ educational level………………………………..88
Table 6: Distribution of years worked by respondent………………………………….89
Table 7: Distribution of functional areas of respondents………………………………91
Table 8: Summary of fit data……………………………………………………………..92
Table 9: Satisfaction Cronbach analysis………………………………………………..94
Table 10: Entrepreneurial Orientation Cronbach analysis…………………………….96
Table 11: Mean score analysis…………………………………………………………...97
Table 12: Comparison analysis of the dependent and independent variables……...98
Table 13: Comparisons of the independent variables…………………………………99
Table 14: Pearson correlation coefficients…………………………………………….102
Table 15: Summary of the results………………………………………………………106
IX
LIST OF FIGURES
Figure 1 – A Model of Middle-level Managers‟ Entrepreneurial Behaviour, Source:
Kuratko, Ireland, Covin, and Hornsby, (2005)………………………………………….30
Figure 2 – A revised Conceptual Framework of Firm-Level Entrepreneurship,
Source: Zahra, (1993)…………………………………………………………………….33
Figure 3 – An integrative Model of Corporate Entrepreneurship Strategy, Source:
Ireland, Covin, and Kuratko, (2009)…………………………………………………….35
Figure 4 – The growth of Telecommunications industry in SA, Source: South African
Telecommunications Reports Q1 2015, Business Monitor International……………47
Figure 5 – Industry Forecast, Source: South African Telecommunications Reports
Q1 2015, Business Monitor International………………………………………………49
Figure 6 – Telecoms sector – Historical data and forecast, Source: SA
Telecommunications Report Q1 2015………………………………………………….52
Figure 7 – Broadband take-up speed, Source: South Africa telecommunications
update, Morgue, (2014)…………………………………………………………………..54
Figure 8 – Telecoms revenue shares, Source: South Africa telecommunications
update, Morgue, (2014)…………………………………………………………………..57
Figure 9 – Mobile subscribers by region, Source: The Mobile Economy Report
2015…………………………………………………………………………………………61
Figure 10 – Global Mobile Profitability, Source: The Mobile Economy Report 2015.63
Figure 11 – Gender Distribution……………………………………………………….....87
Figure 12 – Respondents Qualifications………………………………………………...88
Figure 13 – Years worked by respondents……………………………………………...90
Figure 14 – Functional areas of respondents…………………………………………...91
X
Figure 15 – Correlation between variables…………………………………………….100
11
CHAPTER 1: INTRODUCTION
1.1 Purpose of the study
The purpose of this study is to evaluate the role of middle-level managers on
Corporate Entrepreneurship within the telecommunications industry within South
Africa. The South African telecommunications industry has seen exponential growth
over the last 24 years, especially within the cell phone industry (benefitting from the
technological enhancements worldwide during the mid-nineties and early 2000‟s),
(Makhaya, G, Roberts, R, 2003). There has been a strong correlation between the
technological developments and entrepreneurship especially within Sillicon Valley
(e.g. Apple and Microsoft). These entrepreneurial developments had an impact on
South Africa, especially within the telecommunications industry.
The research investigates the relationship between Corporate Entrepreneurship
(Innovation, Self-efficacy, Performance, Risk taking, Pro-activeness) and
Entrepreneurial Orientation.
The results of this study confirm that there is a relationship between the independent
variables of Corporate Entrepreneurship and entrepreneurial orientation. Dress,
Lumpkin and McGee, 1999, p. 85, stated that: “Virtually all organisations, new start-
ups, major corporations, and alliances among global partners, are striving to exploit
product-market opportunities through innovative and proactive behaviour”.
12
1.2 Problem statement
1.2.1 Main Problem
The study will assess the role of middle level management on Corporate
Entrepreneurship within the telecommunications industry in South Africa. Empirical
research in this area has been explored in the past. Quinn (1985) was among the
first to recognise the valuable contributions and important roles of middle level
managers in the innovation process in an established company. The study will focus
on recent research and exploring additional factors that have an impact on Corporate
Entrepreneurship from a middle level management perspective.
1.2.2 Sub-problem 1
Middle-level managers are an important link between top-level management and
operational-level management; they have to implement and communicate corporate
entrepreneurial strategies between top-level management and operational-level
management. This research will analyse the important role that middle-level
managers play in the implementation of the corporate entrepreneurial strategy of the
organisation.
1.2.3 Sub-problem 2
This study will establish the important role middle-level management play in
communicating the corporate entrepreneurial strategy between top-level
management and operational-level managers.
13
1.3 Significance of the study
Research that analysis role of middle-level management on Corporate
Entrepreneurship within the telecommunications industry within South Africa have
been limited. Previous studies have focused on middle-level management and
Corporate Entrepreneurship, but have been limited when it comes to the
telecommunications industry (Kuratko, Ireland, Covin and Hornsby 2005).
This study will assist the telecommunications companies within South Africa to use
the results to enhance an entrepreneurial culture amongst middle-level managers.
Middle-level managers play a strategic role within the company to communicate the
entrepreneurial strategy of the firm between top-level and operational-level
managers.
The telecommunications industry will be able to benchmark the level of
entrepreneurial orientation amongst middle-level managers within
telecommunications compared to middle-level managers within other industries.
Middle-level managers within the telecommunications industry will be able to have a
better understanding of their own entrepreneurial orientation and identify gaps that
they need to fill to improve their entrepreneurial orientation within their firms.
This study will allow the South African Telecommunications industry to have a better
understanding of the level of Corporate Entrepreneurship within the industry and also
amongst middle-level managers.
14
1.4 Delimitations of the study
This study focuses on the role of middle-level management on Corporate
Entrepreneurship within the Telecommunications industry in South Africa. The study
will specifically focus on the cell phone industry within South Africa. The company
sizes are medium to large.
The target population for the study will be middle-level managers within the
telecommunications industry. They form an important part of the organisational
corporate entrepreneurial strategy; middle level managers communicate corporate
entrepreneurial strategies from top-level managers to operational-level managers.
The online questionnaire (from Google) will only target responses within the South
African telecommunications industry. The study includes listed and non-listed
companies.
The research methodology used for this study is:
Quantitative Research method
Structural Equation Model (Regression Analysis)
Descriptive statistics
15
1.5 Definition of terms
Entrepreneurship – Entrepreneurship is seen as new combinations; including the
doing of new things that have already being done in a new way. New combinations
include: the introduction of new goods, new method of production, opening of new
markets, new source of supply and new organisations (Schumpeter, 1934).
Corporate Entrepreneurship – Some researchers see Corporate Entrepreneurship
as embodying entrepreneurial behaviour requiring organisational sanctions and
resource commitments for the purpose of developing different types of value-creating
innovations (Alterowitz, 1988; Jennings and Young, 1990). Guth and Ginsberg
(1990) stressed that Corporate Entrepreneurship encompasses two major
phenomena: new venture creation within existing organisations and the
transformation of on-going organisations through strategic renewal. Zahra (1991, p.
262) observed that Corporate Entrepreneurship may be formal or informal activities
aimed at creating new business in established companies through product and
process innovations and market developments.
Entrepreneurial Orientation - According to Dress and Lumpkin (2005)
entrepreneurial orientation (EO) refers to: the strategy-making practices that
organisations use to identify and launch corporate ventures and; a frame of mind and
perspective about entrepreneurship reflected in a firm„s on-going processes and
corporate culture. According to Urban and Barreira (2010) the concept of EO
incorporates organisational-level processes, practices and decision-making styles of
innovative organisations.
16
Entrepreneurial Employee Activity - Entrepreneurial employee activity refers to
employees who, in the past three years, were actively involved in and had a leading
role in at least one of these phases (i.e. „idea development for a new activity‟ and/or
„preparation and implementation of a new activity‟) - Global Entrepreneurship
Monitor: 2011 Extended Report. The GEM report operationalize entrepreneurial
employee activity „as employees developing new activities for their main employer,
such as developing or launching new goods or services, or setting up a new
business unit, a new establishment or subsidiary‟.
1.6 Assumptions of the study
The respondents (middle-level managers) in the research will have enough
knowledge of the research topic; they are at a level within the organisation where
they have gained the necessary experience to provide applicable feedback to the
research questionnaire (Appendix A). The study assumes that middle-level
managers have an understanding of entrepreneurial orientation.
The study will only focus on the telecommunications industry within South Africa and
will provide a better understanding of the corporate entrepreneurial strategy within
this industry. The feedback form the respondents will be accurate and valid data
because the study will focus on managerial employees who will, under normal
circumstances, have a better understanding of the strategic vision of the
organisation.
17
Chapter 2: Literature review
2.1 Introduction
The literature review will analyse previous research done within Corporate
Entrepreneurship, focusing on middle-level managers within the telecommunications
industry. The chapter on Corporate Entrepreneurship will focus on previous research
within the telecommunications industry, and the role of middle-level management on
Corporate Entrepreneurship within the industry. Firms either promote or do not
promote a culture of Corporate Entrepreneurship. The research will identify those
characteristics that firms display to encourage entrepreneurship within organisations.
Many authors have singled out Corporate Entrepreneurship as an organizational
process that contributes to firm survival and performance (Covin and Slevin, 1989;
Drucker, 1985; Lumpkin and Dress, 1996; Miller, 1983; Zahra, 1993). Among the
management practices believed to facilitate entrepreneurial behaviour are a firm‟s
strategic management practices (e.g. Covin and Slevin, 1991a; Miller, 1983; Murray,
1984; Zahra, 1991).
To date, little systematic attention has been given to empirically documenting and
understanding the contribution middle-level managers make in the context of
Corporate Entrepreneurship (Hornsby, Kuratko and Zahra 2002). The roles of
middle-level managers in Corporate Entrepreneurship are not clear, hence the need
to clarify their roles within this study. Despite the paucity of past empirical research in
this area, some insights can be gained from reviewing recent writings in the field of
18
strategic management and international business, both of which have begun to
recognise the valuable contributions middle-level managers can make to the process
of strategic change and organisational renewal and to fostering entrepreneurial
activities (Hornsby, Kuratko and Zahra 2002). The existing literature on free
enterprise / entrepreneurship has implicitly stated that Corporate Entrepreneurship
and company performance are positively related to each other (Moreno and Casillas
2008).
The need to understand Corporate Entrepreneurship has been gaining in importance
(Stevenson and Jarillo, 1990). Corporate Entrepreneurship is held to promote
entrepreneurial behaviours within an organisation (Echols and Neck, 1998). It uses
the fundamentals of management, while adopting a behavioural style that challenges
bureaucracy and encourages innovation (Barringer and Bluedorn, 1999). It is also
responsible for stimulating innovation within the organisation through the
examination of potential new opportunities, resource acquisition, implementation,
exploitation and commercialisation of the new products or services (Guth and
Ginsberg, 1990).
A South African Perspective:
Research on Corporate Entrepreneurship in emerging markets like South Africa has
been limited. Despite some of the research alluded to by Dress, 2003, in studying
internationalisation and Corporate Entrepreneurship, not much progress has been
made. Within the South African landscape, like in other emerging markets, political
connections are important. In a survey by Chinese firms, Peng and Luo (2000) found
that managerial ties with other firms and government officials are important in
19
improving firm performance. Makhaya and Roberts, 2003, stated that the South
African economy is generally classified as middle income, but the distribution of
income is one of the most unequal in the world. In the mid-1990‟s, the South African
telecommunications policy was hailed as drawing on international best practices
while at the same time seeking to deal with the country‟s particular historical legacies
(Makhaya and Roberts, 2003).
The study will seek to understand the role of Corporate Entrepreneurship within the
telecommunications industry (in South Africa) with a special focus on middle-level
management. Middle-level managers act as an important intermediary between top-
level management and operational / front-line managers. Top-level managers set the
strategic vision and mission of the organisation and it is the responsibility of middle-
level managers to facilitate and communicate the said objectives to operational
managers who implement these objectives. Middle-level managers are enablers of
individual entrepreneurial actions such as those taken to create new ventures or
engage in strategic renewal (Kuratko, Morris, and Covin, 2005). Middle-level
managers endorse, refine, and shepherd entrepreneurial opportunities and identify,
acquire, and deploy resources needed to pursue those opportunities (Kuratko et al.,
2005). In some firms, middle-level managers have a mandate to initiate
entrepreneurial activities within their respective divisions; motivating operational
managers to be creative and innovative. Middle-level managers have much to do
with how entrepreneurial initiatives take shape (Kuratko, Morris, and Covin, J, 2005).
20
2.2 Definition: Corporate Entrepreneurship
Corporate Entrepreneurship is a term used to describe entrepreneurial behaviour
inside established mid-sized and large organisations (Kuratko, D. F., Morris, H. M
and Covin, J.G., 2005). Salvato, 2009, emphasise Corporate Entrepreneurship as
the capability that allows managers to systematically overcome internal constraints
so they can reinvent the company through novel business initiatives. Zahra and
Garvis (2000) define Corporate Entrepreneurship as the sum of a company‟s efforts
aimed at innovation, pro-activeness and risk taking.
Lumpkin and Dress (1996) define Corporate Entrepreneurship as a process in which
individuals in an existing organisation seek for opportunities by developing and
venturing into new businesses. Covin and Slevin (1991) define entrepreneurial
orientation as the presence of organisational behaviour reflecting risk-taking, pro-
activeness, and innovativeness.
The impact of corporate entrepreneurial activities on successful company
performance attracted research in the organisational factors that promote these
activities (Zahra, 1991; Zahra and Covin, 1995); previous research based their
studies on identifying the factors that impact companies to focus on Corporate
Entrepreneurship, factors that create a corporate culture.
Ginsberg and Hay (1994) recognised the importance of middle-level managers in
enhancing and cultivating such autonomous behaviour thereby fostering Corporate
Entrepreneurship within organisations. Rewards can be an important motivator to
21
create an entrepreneurial culture within an organisation and middle-level managers
play an important role in the initiation of a reward system within their organisations.
This research will further elaborate on the role of middle-level managers on
Corporate Entrepreneurship within the telecommunications industry analysing how
middle-level managers impact the innovativeness of these organisations. Middle-
level managers form an important strategic medium between top-level managers and
operational-level managers. Middle-level managers play a critical role in the
implementation of corporate entrepreneurial strategies within any organisation.
2.2.1 Innovativeness
Innovativeness refers to a willingness to support creativity and experimentation in
introducing new products/services, and novelty, technological leadership and R&D in
developing new processes (Lumpkin, G.T., and Dress, G.G., 2001). Innovativeness
refers to the willingness of middle-level managers to facilitate and promote
entrepreneurial activity within the firm (Quinn, 1985; Hisrich and Peters, 1986; Sykes
and Block, 1989 and Sathe, 1989). The support of middle-level managers for
innovation amongst employees contributes towards an entrepreneurial culture and
also ensures that Corporate Entrepreneurship is embedded in the firm‟s processes.
To be competitive in the global economy, firms need to continuously improve their
products, services, technological developments and administration. Executives
agree that innovation is the most important pathway for companies to accelerate
their pace of change in the global environment (Kuratko, Hornsby and Covin, 2014).
22
Firms recognise the need to be competitive in the global environment and
understand the importance and challenge of sustaining an innovative working
environment within the changing global economy. A significant form of corporate
innovation is envisioned to be a process that can facilitate firm‟s efforts to innovate
constantly and cope effectively with the competitive realities companies encounter
when competing in world markets (Kuratko, Hornsby and Covin, 2014). Leading
strategic thinkers are moving beyond the traditional product and service innovations
to pioneering innovation in processes, value chains, business models, and all
functions of management (Govindarajan and Trimble, 2005). Middle-level managers
play an important role in creating an environment where innovation is encouraged
among employees. Corporate Entrepreneurship and innovation are concepts that
have captivated the interest of executives in many corporate boardrooms (Morris,
Kuratko, and Covin, 2011).
Organisations require middle-level managers that display strong leadership;
leadership that inspires innovation and employees to take calculated risks. Firms that
exhibit Corporate Entrepreneurship are typically viewed as dynamic, flexible entities
prepared to take advantage of new business opportunities when they arise (Kuratko,
Goldsby, and Hornsby, 2012).
Effective Corporate Entrepreneurship facilitates the firm‟s efforts to exploit its current
competitive advantage, explore further opportunities and the competencies required
to successfully pursue them (Covin and Miles, 1999). Some articles suggest that
organisational learning allows the company to develop capabilities that enhance
innovation and that innovation is what positively affects performance (Baker and
23
Sinkula, 1999, 2002). Schumpeter (1934) said that entrepreneurial activity involves
the carrying out of new combinations - “creative destruction” of an existing
equilibrium within a particular industry. Innovation within an organisation must be
initiated by top-level management, however, effective communication and
implementation of the innovations are carried out by middle-level managers. That is,
middle-level managers need to communicate the vision of top-level managers to
operational-level managers.
The above discussion leads to the following hypothesis:
H1: There is a strong correlation between entrepreneurial orientation and
innovativeness amongst middle-level managers within organisations.
2.2.2 Performance
Performance is a multidimensional concept and the relationship between
Entrepreneurial Orientation and performance may depend upon the indicators used
to assess performance (Lumpkin and Dress, 1996). Businesses with high
Entrepreneurial Orientation can target premium market segments, charge high prices
and entre markets before competitors, which should provide them with larger profits
and allow them to expand faster (Zahra and Covin, 1995).
The EO-performance literature is long-standing, and empirical studies have largely
found that firms with a more entrepreneurial orientation focus perform better (Zahra,
1991; Zahra and Covin, 1995, Wiklund, 1999). Most recently, Rauch et al. (2004)
based on a meta-analysis of 37 studies concluded that the EO-performance
relationship is moderately large and that firms benefit from Entrepreneurial
24
Orientation. The conceptual arguments of previous research converge on the idea
that firms benefit from highlighting newness, responsiveness, and a degree of
boldness (Rauch, Wiklund, Lumpkin and Frese, 2001). With the current global
competitive environment, firms need to be proactive and more innovative to create
new opportunities to remain competitive. Efforts to anticipate demand and
aggressively position new product / service offerings often result in strong
performance (Ireland, Hitt and Sirmon, 2003).
Most of the broad empirical studies on the relation between innovation and
performance provide evidence that this relation is positive (Bierly and Chakrabarti,
1996; Brown and Eisenhard, 1995 and Roberts, 1999). Firm size has a positive
effect on performance and also on innovation because the biggest firms usually have
more resources to invest in innovation (Damanpour, 1992; Kimberly and Evanisko,
1981). Environments that are turbulent in nature, a fast paced changing economic
environment, put additional pressure on firms to bring new products and services to
the marketplace. In a hostile environment, innovation is an obligation the
environment imposes and that improves performance (Miller and Friesen, 1983).
The above discussion leads to the following hypothesis:
H2: Middle-level managers perceive that there is a strong relationship between
entrepreneurial orientation and organisational performance.
2.2.3 Risk taking and Pro-activeness
The risk-taking dimension of strategic posture is a firm‟s propensity to take business-
related chances with regard to strategic actions in the face of uncertainty (Richard,
25
Barnett, Dwyer, and Chadwick, 2004). Risk taking means a tendency to take bold
actions such as venturing into unknown new markets, committing a large portion of
resources to ventures with uncertain outcomes, and/or borrowing heavily (Lumpkin
and Dress, 2001). Autonomy within the entrepreneurial organisation allows
individuals to act freely and be able to explore new ideas (Lumpkin and Dress,
2009). Firms can leverage from this type of behaviour; it is a competitive advantage
for a firm that leads to entry into new markets before others. Middle-level managers
must allow employees to be willing to take risks that can benefit the firm in the future
(the risk must be manageable and it must be calculated risks). According to Wang
(2008), firms that are entrepreneurial in nature, are risk-tolerant and this
characteristic often stimulates them to eliminate the kind of traditional authoritarian
structures that inhibit collaborative learning.
Pro-activeness is a propensity to take the initiative to compete aggressively with
other firms (Covin & Slevin, 1989). This is consistent with Miller and Friesen‟s (1978)
view of pro-activeness as changing the environment by introducing new products
and technologies, and with Venkatraman‟s (1989a) definition of pro-activeness as
seeking new opportunities which may or may not be related to the present line of
operations, introduction of new products and brands ahead of competition,
strategically eliminating operations which are in the mature or declining stages of life
cycle (Venkatraman 1989a: 949).
Both the risk-taking and pro-activeness dimensions of entrepreneurial orientation
require a firm to make quick decisions and aggressively compete by implementing
bold and risky strategies in the face of uncertainty. Pro-activeness is an opportunity-
26
seeking, forward-looking perspective characterised by the introduction of new
products and services ahead of competitors and acting in anticipation of future
demand (Lumpkin and Dress, 1996). This research will emphasise the important
correlation that exist between entrepreneurial orientation and firms that incorporate
risk taking and pro-activeness within their corporate strategy.
The above discussion leads to the following hypothesis:
H3: There is a strong correlation between middle-level managers who
incorporates risk taking and pro-activeness within their organisations, and
entrepreneurial orientation.
2.3 The need for Corporate Entrepreneurship:
The telecommunications industry has changed dramatically over the last two
decades; with global companies like Apple bringing new technological advancement
to the market rapidly; the South African economy needs to create employment for
sustainable economic growth, but importantly needs to stay abreast of the
technological developments that are happening globally. The dramatic changes in
the global economy, which intensifies competition within the telecommunications
industry, demands that developing economies like South Africa ensure that
Corporate Entrepreneurship are imbedded within the telecommunications industry.
Middle-level managers play a significant role on Corporate Entrepreneurship within
the telecommunications industry. Ghoshal and Bartlett (1994) see middle-level
managers as enablers of individual entrepreneurial actions such as those taken to
create new ventures or engage in strategic renewal. As facilitators of information
27
flows, middle-level managers help shape entrepreneurial actions (as determined by
top-level managers) and their use in the form of competencies by first-level
managers / operational-level managers and their direct reports (Floyd and Lane,
2000; Ginsberg and Hay, 1994 and Kanter, 1985). Hence, there is a strong
correlation between middle-level managers and the performance of a firm; they have
a direct impact on the company‟s performance.
Nonaka and Takeuchi (1995) emphasised the importance of middle-level managers
to innovation (a commonly sought outcome of Corporate Entrepreneurship),
suggesting that their central organisational position allows them to gather and absorb
innovative ideas from inside and outside the firm. By interacting with operational and
top-level managers, those operating in the middle influence and shape
entrepreneurial actions as they parcel and integrate knowledge towards proactively
pursue some form of newness (Kuratko, Ireland, Covin, and Hornsby, 2005). Hence,
middle-level managers endorse, refine, and shepherd entrepreneurial opportunities
as well as identify, acquire, and deploy resources needed to pursue those
opportunities (Kuratko, Ireland, Covin, and Hornsby, 2005).
Fulop (1991) points out the distinction between top-level managers and middle-level
managers is often that of strategic actions vs. implementation of those actions. We
can conclude that middle-level managers implement the strategies developed by top-
level managers.
Entrepreneurial behaviour continuous to be seen as an important path to competitive
advantage and improved performance in firms of all types and sizes (Lumpkin and
28
Dress, 1996, and Russell, 1999). Zahra, Jennings, and Kuratko, 1999, believe that
firms failing to effectively use entrepreneurial actions in the fast-paced and complex
global economy reduce the probability of successful competition in their chosen
markets. Entrepreneurial behaviour does not occur in a vacuum; rather, it takes
place within the context of the organisation‟s full array of actions (Dress, Lumpkin,
and Covin, 1997). Firms that successfully implement corporate entrepreneurship will
have a competitive advantage over their competitors, which will lead to an
improvement in firm performance.
In its broadest conception, entrepreneurial behaviour is a comprehensive term that
captures all actions taken by a firm‟s members that relate to the discovery,
evaluation, and exploitation of entrepreneurial opportunities (Shane and
Venkataraman, 2000; Smith and DiGregorio, 2002). The entrepreneurial behaviour
of middle-level managers is fundamentally defined by these individuals‟ behaviours
that relate to the discovery, evaluation, and exploitation of entrepreneurial
opportunities (Kuratko, Ireland, Covin, and Hornsby, 2005). It is the behavioural
attitude of middle-level managers that will determine the impact they will have on the
corporate entrepreneurial strategy of the firm; the implementation of the corporate
entrepreneurial strategy is dependent upon all three managerial levels (top, middle
and operational).
Middle-level managers endorse Corporate Entrepreneurship perspectives coming
from top-level managers and sell their value-creating potential to the primary
implementers, operational-level managers and their direct reports (Kuratko, Ireland,
Covin, and Hornsby, 2005).
29
Entrepreneurial initiatives are inherently experiments that evolve from fundamental
business concepts to more fully defined business models (Block and Macmillan,
1993). The process of how entrepreneurial initiatives take shape is one of the
responsibilities of middle-level managers. The behaviour of middle-level managers
involve moulding the entrepreneurial opportunity into one that makes sense for the
organisation, given the organisation‟s strategy, resources, and political structure
(Kuratko, Ireland, Covin, and Hornsby, 2005). Entrepreneurial initiatives will not
necessarily have their impetus within the middle-level management domain, they will
tend to operate and grow under the preview of middle-level managers (Burgelman
and Sayles, 1986; Kunter, 1983).
Corporate Entrepreneurship within the telecommunications industry has not been
extensively researched especially within the South African context. Thokozani Nkosi,
2011, research report focused on Corporate Entrepreneurship and organisational
performance in the Information and Communications industry in South Africa.
This research will differ from the study concluded in 2011 by focusing on the role of
middle-level managers on Corporate Entrepreneurship within the
Telecommunications industry within South Africa. Middle-level managers are
strategic in the communication and implementation of the corporate entrepreneurial
strategy of a firm. Kuratko, Ireland, Covin, and Hornsby (2005), developed a Model
of Middle-Level Managers‟ Entrepreneurial Behaviour.
30
According to Russell and Russell (1992) there are eight dimensions of culture that
relate to innovative intrapreneurial process:
1) Value for innovation as a practice and as a source of competitive advantage,
2) Norms encouraging creativity among organisational members,
3) Norms encouraging search for innovative opportunities from external sources,
4) Norms that facilitate resource support for innovative ventures,
5) Norms supporting information-sharing between individuals and groups
regardless of organisational position,
6) Norms that promote tolerance for failure when creative ideas or projects are
not successful,
7) Norms that encourage the open-minded consideration of new ideas and
projects,
8) Norms that support the implementation of innovations regardless of the
individual or group‟s involvement in the development of the venture.
The model below (Figure 1) endorses the important role middle-level managers‟ play
with regards to Corporate Entrepreneurship within firms. Middle-level managers
need to ensure that the corporate entrepreneurial strategy is effectively
communicated between top-level and operational-level managers and
implementation that strategy.
31
Figure 1: A Model of Middle-Level Managers – (Kuratko, Ireland, Covin, and
Hornsby, 2005).
The communication responsibilities of middle-level managers include facilitating
information flow in ways that support project development and implementation efforts
(Kuratko, Ireland, Covin, and Hornsby, 2005). The role of operating-level managers
is to absorb relevant information gained from outside the firm while responding to
middle-level managers‟ communication of information that is based on top-level
managers‟ decisions (Floyd and Lane, 2000). Different actions are associated with
each managerial role (Miller and Camp, 1985).
32
Kuratko, Montagno, and Hornsby (1990), identified three factors to be the most
important antecedents of middle-level managers‟ entrepreneurial behaviour:
management support, organisational structure, and rewards. Hornsby et al. (2002)
developed the Corporate Entrepreneurship Assessment Instrument (CEAI) to
partially replicate and extend results previously reported by Kuratko et al. (1990) and
Hornsby et al. (1999).
The results of the corporate antrepreneurship assessment Instrument indicated that
there are five specific organisational antecedents of the entrepreneurial behaviour of
middle-level managers. As depicted in Figure 1 these antecedents are: 1
management support, 2 work discretion/autonomy, 3 rewards/reinforcement, 4 time
availability and 5 organisational boundaries. Hornsby et al. (2002) developed the
Corporate Entrepreneurship Assessment Instrument (CEAI) to partially replicate and
extend results previously reported by Kuratko et al. (1990) and Hornsby et al. (1999).
The telecommunications industry has changed dramatically over the past 20 years;
innovation and creativity has been strategic in the change in competition within this
industry. We have seen exponential growth within this industry within the South
African context, i.e. telecommunications companies has performed well since 1994.
The 1990‟s brought with it a significant change in the general perception of the value
of entrepreneurial behaviour as a predictor of firm performance (Kuratko et al.,
2005). Companies had to more aware of the positive impact of entrepreneurship on
their performance.
33
Kotter (1999) observed that general managers‟ behaviour essentially relates to
agendas and networks; middle-level managers‟ entrepreneurial behaviour is
essentially focused on entrepreneurial opportunities and resources. Kuratko, Ireland,
Covin, and Hornsby (2005), stated that middle-level managers endorse, refine, and
shepherd entrepreneurial opportunities and identify, acquire, and deploy resources
needed to pursue those opportunities.
Middle-level managers evaluate entrepreneurial initiatives from operational-level
managers and initiate their own entrepreneurial opportunities within the firm. Bartlett
and Ghoshal (1997) suggest that in an autonomous context, endorsement
behaviours are typically in support of initiatives originating below the middle
management level and aimed at influencing the outlook and perceptions of those
above the middle management level. According to Kuratko et al., (2005), in an
induced sense, middle-level managers endorse Corporate Entrepreneurship
perspectives coming from top-level executives and sell their value-creating potential
to the primary implementers, operational-level managers and their direct reports.
Entrepreneurial initiatives are inherently experiments that evolve from fundamental
business concepts to more fully defined business models (Block and MacMillan,
1993).
Covin and Slevin (1991) developed a firm-level entrepreneurship model in 1991.
Zahra (1993) develop a revised model of firm-level entrepreneurship (Figure 2). The
revision highlights a more parsimonious classification of the external environment set
than originally suggested (Zahra, 1993). Zahra (1993) model eliminates the
34
technological sophistication variable discussed by Covin and Slevin because that
appears to be redundant with environmental dynamism.
Figure 2: A Revised Conceptual Framework of Firm-level Entrepreneurship
(Zahra, 1993)
The revised model adds another important environmental attribute: munificence,
which refers to the abundance of opportunities for innovation in the industry (Zahra,
1993). This attribute is important for entrepreneurship research because some
environments may impose upper limits on what a firm can do with regard to
innovation, pro-activeness and risk-taking behaviours (Zahra, 1993). The
measurement of the environment has been the subject of discussion and debate for
Firm-level
Entrepreneurship
-Intensity
-Formality
-Type
-Duration
Strategic
Variables
-Mission
-Competitive Tactics
Internal
Variables
-Managerial Values
-Background Variables
Firm
Performance
-Non-Financial
External
Environment
-Dynamism
-Hostility
35
more than two decades (Dress and Rasheed, 1991; Prescott, 1986). The revised
model adopts a broader definition of a firm‟s entrepreneurial behaviour than originally
proposed; it highlights the need to consider domestic and international
entrepreneurial activities (Zahra, 1993).
Zahra (1993) revised model identifies four subsets of variables: (1) managerial
values and background (including age, past experience, and functional expertise);
(2) organisational structure (including centralisation, formalisation, complexity, and
organicity); (3) managerial process (including participation and fairness); and (4)
organisational culture (including openness, and empowerment). Since the
relationship among the four sets is empirical in nature, it is important for future
researchers to examine their links to determine if a more parsimonious classification
of the subsets can be found (Zahra, 1993). The revised model also considers both
financial and non-financial outcomes of entrepreneurial activities; it proposes that
some non-financial benefits from entrepreneurship can produce financial results
(Zahra, 1993).
According to Zahra (1993), the revisions help to refocus the 44 propositions offered
by Covin and Slevin (1991). Table 1, Zahra (1993), presents a proposed set of
propositions that reduces redundancy in the original set offered by Covin and Slevin
(1991). To enhance the clarity of the presentation, the original propositions are listed
first and then the suggested revisions are presented (Zahra, 1993).
Figure 3 (Ireland, Covin, and Kuratko, 2009), suggested that a Corporate
Entrepreneurship strategy is manifested through the presence of three elements: an
36
entrepreneurial strategic vision, a pro-entrepreneurship organisational architecture,
and entrepreneurial processes and behaviour as exhibited across the organisational
hierarchy. According to Ireland, Covin, and Kuratko (2009), their conceptualisation of
Corporate Entrepreneurship as a strategy uses two of Mintzberg‟s (1987a,b) five
definitions of strategy: (1) strategy as perspective, and (2) strategy as pattern.
Figure 3: An Integrative Model of Corporate Entrepreneurship Strategy
(Ireland, Covin, and Kuratko, 2009)
37
The perspective as a Corporate Entrepreneurship strategy represents a shared
ideology favouring the pursuit of competitive advantage principally through
innovation and entrepreneurial behaviour on a sustained basis (Russell, 1999). As
pattern, Corporate Entrepreneurship strategy denotes a continuous, consistent
reliance on entrepreneurial behaviour, whether intended or not (Mintzberg, 1987a, p.
12). The pro-entrepreneurship organisational architecture in figure 3 is a recursive
path through which entrepreneurial vision and behaviours interact to create a
Corporate Entrepreneurship strategy (Ireland, Covin, and Kuratko, 2009).
Consistent with what Meyer and Heppard (2000) refer to as an entrepreneurial
dominant logic, an entrepreneurial strategic vision represents a commitment to
innovation and entrepreneurial processes and behaviour that is expressed as the
organisation‟s philosophical modus operandi (Ireland, Covin, and Kuratko, 2009). An
effective entrepreneurial strategic vision is more a reflection of an entrepreneurial
mind-set, or a way of thinking about business that captures the benefits of
uncertainty (McGrath and MacMillan, 2000).
An entrepreneurial strategic vision is the mechanism by which top-level managers
paint the picture of the type of organisation they hope to lead in the future - an
organisation that is opportunity-focused, innovative, and self-renewing (Ireland,
Covin, and Kuratko, 2009). The presence of pro-entrepreneurship cognitions
suggests that individuals have broadly favourable thoughts about entrepreneurship
as a phenomenon, and that these thoughts are non-context-specific, that is, they
exist as personal cognitions rather than as products of the specific situations in
which individuals may find themselves (Ireland, Covin, and Kuratko, 2009). When
38
pro-entrepreneurship cognitions are broadly descriptive of members, they are
reflected in the organisation‟s culture (Ireland et al., 2009). While entrepreneurial
behaviour can be manifested through many specific actions, recognising and
exploiting opportunity, and defining processes are the essence of entrepreneurial
behaviour (Shane and Venkataraman, 2000). The expectation that pro-
entrepreneurship cognitions will lead to entrepreneurial opportunity recognition is
consistent with arguments by Mitchell et al. (2002), Shane and Venkataraman, and
Eckhardt and Shane that cognitions can predispose individuals toward recognising
entrepreneurial opportunity (Ireland et al., 2009). Zahra (1991) argued that greater
amounts of environmental hostility, dynamism, and heterogeneity call for Corporate
Entrepreneurship strategy. Lumpkin and Dress (1996) suggested that firms facing
rapidly changing, fast-paced competitive environments might be best served by
implementing a Corporate Entrepreneurship strategy.
Organisational members‟ pro-entrepreneurship cognitions facilitate recognising
entrepreneurial opportunity, i.e. these individuals are well attuned to the presence of
such opportunities (Kuratko et al., 1993; McGrath and MacMillan, 2000). Competitive
intensity, technological change, and product-market domain evolution will be
conducive to the emergence of entrepreneurial opportunities (Ireland et al., 2009).
The vision for Corporate Entrepreneurship is the responsibility of top-level managers,
they need to promote entrepreneurial behaviour when a Corporate Entrepreneurship
strategy is used. However, the responsibility for entrepreneurship does not solely
rest with top-level managers; it is a shared responsibility according to Bartlett and
Ghoshal, (1997) and Covin and Slevin, (2002). A pro-entrepreneurship
organisational architecture is not a unique organisational form but an internal context
39
that exhibits certain attributes that individually and collectively encourage
entrepreneurial behaviour (Ireland et al., 2009).
2.3.1 Implications of the Model of Middle-Level Managers’ Entrepreneurial
Behaviour
Interrelated outcomes accrue to organisations and managers as a result of middle-
level managers‟ entrepreneurial behaviour (Kuratko et al., 2005). What is important
for middle-level managers‟ is the impact their entrepreneurial behaviour has on the
firm and whether it has a positive impact on their skill levels. It is imperative that
there is a positive relationship between the entrepreneurial behaviours of middle-
level managers and firm performance. The firm must be able to expand its markets
share through entrepreneurial initiatives. Firms use reward systems to motivate
employees to be entrepreneurial by providing incentives for innovative ideas.
One implication of the model is that managers will choose to engage in
entrepreneurial behaviour if they perceive that the outcomes received from their
actions will meet or exceed their expectations (Kuratko et al., 2005). Porter and
Lawler (1968), stated that the relationship between individual effort and performance
is moderated by individual skills, abilities, and role perceptions and the relationship
between performance and outcomes affects whether or not the individual is likely to
repeat the behaviour. According to Kuratko et al., (2005), if entrepreneurial
managers are equity sensitive (which Hornsby and Kuratko, 2003 find to be the case
for middle-level managers), they will compare the outcomes received for their
entrepreneurial actions to the outcomes by those who choose not to act
40
entrepreneurially. This is in accordance with the work of Porter and Lawler (1968)
who state that to sustain entrepreneurial behaviour, managers acting
entrepreneurially must believe that their efforts will affect performance and that
performance will result in desired outcomes (Gatewood, Shaver, Powers, and
Gartner, 2002).
Changes in the external and internal environments may lead to pressure for change
by providing feedback that a firm is misaligned with its economic environment
(Kuratko et al., 2005). This misalignment in turn decreases the effectiveness of
continuing with the strategy and increases the efficiency of engaging in multifaceted
and radical change (Friesen and Miller, 1986). Success of entrepreneurial actions
can be based on either financial outcomes such as increased sales, productivity,
market share, reduced waste and labour efficiencies or behavioural criteria such as
number of ideas suggested and implemented, amount of time spent working on new
ideas, and amount of time spent outside of normal channels to pursue the ideas
(Hornsby et al., 1999).
Porter and Lawler (1968), stated that the perceptions of the outcomes made by the
organisation‟s top-level executives play a key role in Corporate Entrepreneurship,
top-level managers must believe that entrepreneurial actions will lead to specifically
desired organisational-level outcomes such as emergence of a pro-entrepreneurship
organisational culture, reestablishment of competitive and enhancement of the firm‟s
innovation capability (Kuratko et al., 2005). Entrepreneurial initiatives should be
beneficial to the individual manager, middle-level manager and the organisation, i.e.
both parties must benefit from entrepreneurial actions. Appropriate individual
41
rewards should foster and sustain entrepreneurial behaviour while achieving desired
organisational outcomes and in turn this reinforces the firm‟s decision to support
Corporate Entrepreneurship (Kuratko et al., 2005). Hornsby and Kuratko (2003)
investigated the relationship between the previously identified antecedents and self-
reported outcomes from managers including the number of new ideas suggested,
the number of new ideas implemented, the number of times recognised for new
ideas, method of recognition, time spent thinking about new ideas, and job
satisfaction.
Bower (1970) was among the first scholars to draw attention to the importance of
middle-level managers as agents of change in contemporary firms. Several other
authors (Drucker, 1985; Kanter, 1983; Peters and Walterman, 1982 and Pinchott,
1985) have discussed different aspects of middle-level managers‟ contributions to
entrepreneurship. Quinn (1985) was among the first to recognise the valuable
contributions and important roles of middle-level managers in the innovation process
in an established company. Quinn (1985) also highlighted the crucial importance of
the roles middle-level managers play in fostering communication about the
company‟s mission, goals, and priorities. Middle-level managers also communicate
their ideas for innovation to top-level managers, thereby creating an opportunity
where these ideas are evaluated and considered within the context of the firm‟s
overall strategic priorities (Burgelman, 1983a, and b). Kanter (1985, 1988) and Quinn
(1985) also note the importance of middle-level managers in promoting autonomous
informal corporate entrepreneurial activities. Middle-level managers achieve this by
providing rewards that encourage employees to experiment with and explore the
feasibility of innovative ideas. Managers also use different approaches to make the
42
organisational structure less resistant to change and, as a result, allowing corporate
entrepreneurial activities to flourish (Hornsby, Kuratko, and Zahra, 2002).
Floyd and Woolridge (1992) argue that middle-level managers frequently play pivotal
roles in championing strategic alternatives and making them accessible to senior
executives. Middle-level managers synthesise and integrate information, thereby
crystallising the strategic issues facing the company and setting the stage for
strategic change; facilitating adaptability by altering the formal structure; and
implementing the formal strategy and providing feedback (Hornsby, Kuratko, and
Zahra, 2002). When the results of Floyd and Woolridge (1992) are connected to the
early findings of Burgelman and Sayles (1986), it becomes clearer that middle-level
managers play a key role in shaping their companies‟ strategic agenda by
influencing the types and intensity of corporate entrepreneurial activities (Hornsby,
Kuratko, and Zahra, 2002).
Nonaka and Takeuchi (1995) also highlight the role of middle-level managers.
Nonaka and Takeuchi (1995), suggests that most innovations emanate from middle-
level managers and the promising ones are then sent to upper management for
further analysis and evaluation. In this model of innovation, middle-level managers
actively and diligently gather innovative ideas from within and outside the firm
(Hornsby, Kuratko, and Zahra, 2002). According to the model developed by Nonaka
and Takeuchi, middle-level managers, being in the best position to identify
innovation opportunities and risk taking initiatives, transfer their knowledge and
expertise to other employees within the company. Another noteworthy feature the
Nonaka and Takeuchi model is the fact that it recognises that middle-level managers
43
frequently work on their ideas, often closely with employees, hoping to refine them
and determine their potential (Hornsby, Kuratko, and Zahra, 2002).
Through their effective communication and use of rewards, middle-level managers
create the social capital and trust needed to foster the corporate entrepreneurial
process (Hornsby, Kuratko, and Zahra, 2002). Bartlett and Ghoshal (1996) observe
that middle-level managers create an environment in their respective divisions or
subsidiaries where innovations and entrepreneurial activities flourish. According to
Bartlett and Ghoshal (1996), middle-level managers are believed to link different
skills, resources, and knowledge in pursuit of those strategic goals defined by senior
managers.
2.3.2 Factors that influence Corporate Entrepreneurship
Hornsby, Kuratko, and Zahra (2002), stated that there are five dimensions that have
an impact on Corporate Entrepreneurship. The first dimension is the appropriate use
of rewards (Scanlan, 1981; Souder, 1981; Kanter, 1985; Barringer and Milkovich,
1998). Theorists stress that an effective reward system that spurs entrepreneurial
activity must consider goals, feedback, emphasis on individual responsibility, and
results-based incentives (Hornsby, Kuratko, and Zahra, 2002). The use of
appropriate rewards can also enhance middle-level managers‟ willingness to assume
the risks associated with entrepreneurial activity (Hornsby, Kuratko, and Zahra,
2002).
44
The second dimension indicates the willingness of managers to facilitate and
promote entrepreneurial activity in the firm (Quinn, 1985; Hisrich and Peters, 1986;
Sykes and Block, 1989 and Damanpour, 1991). Middle-level managers are
supportive of innovative ideas and share their expertise with operational-level
managers (and other employees within the organisation), thus, creating a culture of
entrepreneurship within the firm.
Kuratko et al, (2005), third dimension is based on resources and their availability for
entrepreneurial activity. Employees must perceive the availability of resources for
innovative activities (Kanter, 1985; Sathe, 1985; Sykes, 1986; Hisrich and Peters,
1986; Slevin and Covin, 1997). The availability of slack resources usually
encourages experimentation and risk-taking behaviours (Burgelman and Sayles,
1986).
The fourth dimension is the existence of a supportive organisational structure
(Souder, 1981; Sathe, 1985; Hisrich and Peters, 1986; Sykes, 1986; Sykes and
Block, 1989; Covin and Slevin, 1991). The structure also provides the administrative
mechanisms, by which ideas are evaluated, chosen, and implemented (Burgelman
and Saykes, 1986). The organisational structure needs to embrace entrepreneurship
and create an environment where employees can be innovative and creative.
The fifth dimension is risk taking which indicates the middle-level managers‟
willingness to take risks and show a tolerance for failure when it occurs (Sathe,
1985, 1989; Sykes, 1986; Sykes and Block, 1989; Quinn, 1985; Kanter, 1985;
Stopford and Baden-Fuller, 1994). The middle-level manager must impart risk taking
45
behaviour with operational-level managers and other employees within the
organisation, and he/she must accept failure from employees who engage in risk
taking behaviour.
Kuratko et al. (1990) presented an exploratory study that used these five
conceptually distinct internal factors that support Corporate Entrepreneurship.
Kuratko et al. (1990) empirical analysis reduced these factors to three: managerial
support, organisational structure, and reward and resource availability (Hornsby,
Kuratko, and Zahra, 2002). The results of the study conducted by Kuratko et al.
(1990) showed that a company‟s pursuit of entrepreneurship is influenced by
tangible (communication, scanning, integration, differentiation, and control) and
intangible (dominant organisational values) internal factors.
A firm‟s strategy influences the internal factors that affect Corporate
Entrepreneurship (Burgelman, 1983 a,b). Middle-level managers perceptions of
these internal factors determine their relative emphasis on the various activities they
undertake to encourage or facilitate Corporate Entrepreneurship (Kuratko et al.,
1990, 1993). Firms that exhibit Corporate Entrepreneurship are typically viewed as
dynamic, flexible entities prepared to take advantage of new business opportunities
when they arise (Kuratko, Goldsby, and Hornsby, 2012). Deviation from prior
routines, strategies, business models, and operating environments are typically
modes of operation in innovation-minded companies (Kuratko, Hornsby, and Covin,
2014), Kuratko et al., 2014, also states that Corporate Entrepreneurship flourishes in
established firms when individuals are free to pursue actions and initiatives.
46
2.3.3 Management support for Corporate Entrepreneurship
The support of management for Corporate Entrepreneurship is important for the
successful implementation of any corporate entrepreneurial strategy. Management
support refers to the willingness of managers to facilitate and promote
entrepreneurial activity in the organisation (Quinn, 1985; Hisrich and Peters, 1986;
Sykes and Block, 1989; Stevenson and Jarillo, 1990; Damanpour, 1991; Kuratko,
Hornsby, and Montagno, 1993; Pearce, Kramer and Robbins, 1997, Hornsby et al.
1999). According to Barringer and Bluedorn (1999) and Zahra et al. (1999) the ability
of the firm to increase its entrepreneurial behaviour is largely determined by the
compatibility of its management practices with its entrepreneurial intentions.
Leadership plays a critical role in creating an entrepreneurial culture within the
organisation. According to Kemelgor (2002) strategic leadership implies the
facilitation of managers who commit to both incremental and radical innovations as
strategically important to the competitiveness of the organisation and tactically
important to its operations and processes.
2.3.4 Dominant logic of Corporate Entrepreneurship
Bettis and Prahalad (1995), refers to dominant logic as the way in which managers
conceptualise the business and make critical resource allocation decisions.
Organisations do have a dominant way of thinking that identifies with the way the
firm operates; there is one dominant logic by which the firm operates. Dominant logic
formally or informally, consciously or unconsciously provides filters in the
interpretation of information from the environment, attenuates complexity and guides
47
the strategies, systems and behaviour of the organisation (Bettis and Prahalad,
1995). According to Morris and Kuratko (2002) for any firm to achieve an
entrepreneurial sustainable competitive advantage it must examine its dominant
logic. The crucial risk in dominant logic is the firm‟s vulnerability to obsolescence.
Morris and Kuratko (2002) also assert that the dominant logic must be periodically
unlearned and the openers to these unlearning and de-learning processes should be
an integral part of the organisation‟s culture.
Morris and Kuratko (2002) argue that a powerful tool for creating what they call a
dynamic dominant logic is to make entrepreneurship the basis upon which the
organisation is conceptualised and resources allocated. Dominant logic allows firms
to be more attentive to opportunity identification and allow them to be more
innovative and creative with the discovery of new product and services within the
market. Morris and Kuratko (2002) embed the dominant logic within the cultural
paradigm of the organisation and argue that a dynamic logic can revitalise an
entrepreneurial culture.
Within Corporate Entrepreneurship there should be some overlap in managerial
beliefs about the substance of strategic priorities and the need for strategic change,
i.e. what is described as consensus on the dominant logic (Dress, Ireland, Zahra,
Floyd, and Janney, 2003). It is essential that there should be an overlap as alluded
to above, if not, middle-level managers will become frustrated by top-level managers
who consistently reject their proposals. In addition to the substance of
entrepreneurial initiatives, consensus on the dominant logic includes shared
understanding on the need for change, i.e. which types of exchange (regeneration,
48
rejuvenation, renewal, or redefinition) are needed (Dress, Ireland, Zahra, Floyd, and
Janney and Lane, 2003). Consensus on the dominant logic increases the likelihood
that managers will share a common set of expectations for role performance and that
they will seek and receive the information necessary to perform in that role (Dress, et
al., 2003). Consensus thus reduces uncertainty about different managerial roles.
2.4 The Growth of Telecommunications Industry in South Africa
Figure 4: Growth of Telecommunications Industry in South Arica
(South Africa Telecommunications Report Q1 2015, Business Monitor International)
The South African telecommunication industry continues to grow, especially with the
range of services that are available and the use of such services by an increasing
number of customers. The total mobile subscribers within South Africa grew from 66
49
million in 2012 to 80 million in 2014; this growth in the telecommunications industry
forces firms to be more innovative when developing products and services. South
Africa moved up one place into 3rd position according to the Business Monitor Index
Risk/Reward Ratings for Sub-Saharan Africa, behind Gabon and Nigeria, following a
1 point increase in its aggregate score, according to the South Africa
Telecommunications Report Quarter 1 2015.
The Telecommunications Report 2015, Quarter 1, also states that South Africa
remains one of the region's most developed markets and operators boast a healthier
subscriber mix than much of the rest of the region, keeping its scores above the
regional average. The South African mobile market is more mature and this means
that growth prospects are slower than many of its neighbours. The report expects
operators to diversify their revenue streams in order to sustain revenue growth.
Diversifying revenue streams provides an ideal opportunity for entrepreneurship
within the telecommunications industry, finding creative ways to increase revenue
growth. Corporate Entrepreneurship should be a key motivator for the industry to
compete locally and internationally. New innovations, like the mobile financial
services, are expanding within South Africa and this allows middle-level managers to
play an important role in promoting Corporate Entrepreneurship within the
telecommunications industry. They need to motivate and create an environment
where entrepreneurship forms part of the organisational culture. Innovation should
be part of the organisational culture and middle-level managers must ensure that
operational-level managers also drive this behaviour.
50
Figure 5 below show the industry forecast for the telecommunications industry within
South Africa, derived from the South Africa Telecommunications Report Q1 2015,
Business Monitor International.
The index states that the expectation is that the cellular mobile subscribers will grow
from 80 million subscribers in 2014 to 85 million subscribers in 2018. There was a
10.7% increase in the amount of subscribers between 2013 and 2014; a reduction in
the MTR (Mobile Termination Rate), the fee that mobile operators levy each other
when they use each other‟s network, contributed to the increase in subscriber base.
The reduction in the mobile termination rate also led to an increase in completion
within the telecommunication‟s industry.
Figure 5
(South Africa Telecommunications Report Q1 2015, Business Monitor International)
51
According to the Telecommunications Report Q1 2015, competition has the potential
to further depress mobile tariffs and drive network expansion to underserved areas.
This will result in an increase in new subscriber acquisition, and the discounting of
inactive SIM cards could result in a severe market correction. The Business Monitor
International (The Telecommunications Report Q1 2015) does not expect the market
to degenerate into a price war, especially as the market is developed to a level that
allows mobile operators to compete on other fronts apart from prices. The major
competitive battles for market share include network quality and coverage, data
services and advanced mobile content, and telecoms crossovers. This scenario
provides an ideal opportunity for middle-level managers within the
telecommunications industry to ensure that the entrepreneurial strategy of their firms
is implemented successfully.
The competitive landscape within the mobile industry is dominated by four major
firms: Vodacom, MTN, Telkom and Cell C with Vodacom and MTN being the two
dominant firms within the local market. Products and services offered are similar
within the industry; even tariffs reductions are no longer providing a competitive
advantage for firms. Organisations need to be more innovative and creative to have
a competitive edge over rivals within the industry. Entrepreneurship should be part of
the firm‟s core focus areas in order to enhance employee performance and overall
company financial performance.
The declining mobile termination rates will continue to affect the mobile operators‟
revenue and new subscribers are coming from the lower end of the market. The
post-paid offering to the lower segment of the market still have opportunities for
52
growth within South Africa. Middle-level managers will have an important role to play
to ensure that their firms get a share of this market through an effective corporate
entrepreneurial strategy. Top-level executives must create a strategic vision that
includes Corporate Entrepreneurship and provide the platform for the rest of the
organisation to implement the Corporate Entrepreneurship strategy.
The Telecommunications Report Q1 2015 confirms that mobile operators must
continue to improve their subscriber mix and increase the number of post-paid
customers on their networks relative to prepaid users, and includes the success with
which mobile operators encourage the uptake of higher value data services.
The Business Monitor International of the Q1 Report of 2015 stated that there were
almost 6.9 million broadband connections in South Africa at the end of 2013. The
broadband market faces rapid changes with the introduction of significantly lower
cost mobile broadband services, doing much to increase broadband subscriber
numbers. The lowering of prices reflects the increasing availability of bandwidth and
cheaper services for end users also reflect the growth of competition in the mobile
broadband sector. Entrepreneurship will play a strategic role ensuring that firms
within the telecommunications industry remain competitive.
53
Figure 6
(South Africa Telecommunications Report Q1 2015, Business Monitor International)
The Business Monitor International Report on the South African Telecommunications
industry stated that there has been an expansion of the fibre-optic network
deployments for residential and business connections with service providers such as
Telkom SA, Vodacom and MTN. The report also informs that this development is
changing the landscape of South Africa‟s wireless sector with intense competition
between the mobile operators driving investments and the roll out of new services
that have the potential to support long-term growth within the sector. Figure 4 shows
a downward trend in fixed-line connections from 4 million subscribers in 2011 to 3.8
million in 2014. The report also expects the downward trend in fixed-line connections
to continue to 3.6 million in 2018. This is due to limited competition in the market and
a movement from fixed-line to mobile substitution.
In contrast, internet users increased from 14.9 million in 2011 to 26.8 million users in
2014. A 55% increase is an indication of the rapid expansion of internet usage. The
54
report also predicted that internet subscribers will grow to 30.8 million in 2018.
Broadband internet subscribers grew from 4.1 million in 2011 to 7.5 million in 2014
and the forecast is that the subscriber base will grow to 8.9 million in 2018. Internet
growth should be a strategic focus for firms within the telecommunications industry;
organisations should focus on increasing their market share and being innovative
within this segment of the market.
According to the Telecommunications Report Q1 2015, the Telecoms Risk/Reward
Index within Sub-Saharan Africa declined from 40.5 in Q4 2014 to 40.1 in Q1 2015.
The report confirms that the average Industry Rewards score dropped 0.3 points to
32.7, and Country Rewards was down 0.9 points to 43.2 and Country Risks score
also fell 0.3 points to 47.6. Although Sub-Saharan Africa has long term growth
prospects, it has one of the lowest regional Telecoms scores globally; the
Telecommunications Report Q1 2015 attributed this to the developmental state of
the economies of these countries and many have high political risk profiles and
relatively immature telecoms markets.
This provides an ideal opportunity for Corporate Entrepreneurship within the
telecommunications industry. Middle-level managers will have a critical role to play to
ensure that firms are more innovative when it comes to growth within this sector.
2.5 South Africa telecommunication update – 2015
The data market is heating up in both the mass-market and high-end segments
because of increased data competition. Recent fibre deployment is expected to
speed up broadband take-up and have an impact on content deployment such as
55
Voice over Data. Mobile revenue is expected to grow marginally (9%) over the next
five years, while fixed-line revenue will decline by 8% (Morgue, 2014). In both cases,
the trend is fuelled by declining voice usage and data will become the main revenue
generator (60% of mobile revenues by 2019), (Morgue, 2014).
Figure 7: Broadband take-up speed
Source: Ovum
The potential for broadband expansion is undoubted, (non-broadband mobile
connections outside South Africa is at 75%.1%), opportunities for the
telecommunications industry to penetrate this market. South Africa has a standard
mobile connection rate of 47.1%. There are opportunities for expansion for mobile
56
operators within South Africa. Unlike operators in many African countries, South
African operators do not promote many service-based data plans (e.g. Facebook or
What Sapp bundles). Notwithstanding, Cell C launched free What Sapp usage in
4Q14.
Table 1: South African Messaging trends
Source: Ovum
Table 1 is an indication that SMS traffic is in decline due to increased usage of social
network platforms. Traffic is largely sustained by free Mses, often used by operators
as a reward and loyalty tool, and by premium messaging. Ovum estimates that the
country‟s outgoing SMS traffic remained relatively stable in 3Q14, at around 3 billion.
In September 2014, the Independent Communications Authority of South Africa
(ICASA) published new mobile termination rates (MTRs). ICASA had released new
-
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
Me
ssa
ge
s (
millio
ns)
South Africa outgoing SMS traffic, 3Q12–3Q14
57
rates in 1Q14. However, in a case brought by mobile operators, a court ruled that the
regulation under which larger players had to pay twice as much as smaller ones was
unlawful. Rates were adjusted to R0.20 for calls from smaller operators using larger
networks and R0.30 for the inverse, have been implemented from 01 October 2014.
This in turn will have an impact on the profitability of larger companies; they must be
innovative and creative to maintain profitability levels. Corporate Entrepreneurship
must be a key strategic initiative for companies within the industry.
Table 2: Telecoms market context (South Africa telecommunication update –
2015)
Statistics 3Q14
Population 51,185,486
Median age 26.21
Urban population (%) 63.31
Households 10,447,598
% of households with broadband 14
GDP ($ban) 711.77
GDP per capita ($) 13,382.75
Yoyo change in GDP (%) 3.10
Annual telecoms spend change (%) -13%
Annual telecoms spend ($ban) 1.7
Monthly mobile ARPU ($) 9
Notes: GDP statistics are based on purchasing-power parity
Sources: Ovum, IMF, World Bank
58
South Africa had one of the continent‟s five highest mobile penetration rates, with a
figure of 151%, at the end of Q3, 2014 (Morgue, 2014). Though the country has one
of the most mature telecoms markets, fixed broadband household penetration stood
at 14% and mobile broadband penetration stood at 58%.
Figure 8: Telecoms revenue shares (South Africa telecommunication update,
2015)
59
With regards to mobile revenue, 85% is the highest revenue generation for the
telecommunications industry, and in terms of the fixed line, 15% has decreased over
the last 20 years. Mobile development has become a key focus for the
telecommunications industry with the expansion of smart phones adding to the
increase in mobile revenue. Vodacom has the highest share of the South African
mobile revenue (51%), followed by MTN (30%), Cell C (17%), and Telkom (2%).
60
Table 3: Forecast
Note: Subscription data refers to year-end Source: Ovum
The forecast predict that mobile broadband revenue will increase between 2014 until
2019. Fixed broadband subscriptions growth will stabilise and the expansion will be
flat, an indication that fixed broadband subscription will be declining whilst there is an
increase in mobile broadband subscription.
0
10
20
30
40
50
60
70
80
90
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
10 000
2014 2015 2016 2017 2018 2019
Su
bscrip
tion
s (m
illion
s)
Reven
ue (
$b
n)
Mobile and fixed broadband subscriptions and revenue, 2014–2019
Mobile revenue Fixed broadband revenue
Mobile subscriptions Fixed broadband subscriptions
61
2.6 The mobile economy
The world is seeing a rapid technology migration to both higher speed mobile
broadband networks and the increased adoption of smartphones and other
connected devices. Mobile broadband connections will account for almost 70% of
the global base by 2020, up from just fewer than 40% at the end of 2014.
Smartphone adoption is already reaching critical mass in developed markets, with
the devices now accounting for 60% of connections. It is the developing world driven
by the increased affordability of devices that will produce most of the future growth,
adding a further 2.9 billion smartphone connections by 2020 – “The Mobile Economy
Report 2015”.
Fuelled by the growing range of new services and applications, data traffic is
expected to see an almost ten-fold increase by 2019. Slowing subscriber numbers,
as well as competitive and regulatory pressures, have led to a slowdown in industry
revenue growth in recent years. Revenue growth is forecast to slow further over the
coming years, with a compound annual growth rate (CAGR) of 3.1% per annum
through to 2020, down from 4% in the period 2008-2014. More encouragingly,
operators are showing an increasing ability to monetise the explosive growth in data
traffic - “The Mobile Economy Report 2015”.
62
Figure 9: Mobile subscribers by region (The Mobile Economy Report, 2015)
Unique subscriber penetration in the developed world is already very high and
approaching saturation, standing at 79% at the end of 2014 - “The Mobile Economy
Report 2015”. The mobile economy report 2015 stated that the penetration rate will
climb only modestly to around 81% by the end of the decade. There is significant
63
room for growth and strategic entrepreneurial initiatives should be employed to
identify growth opportunities. One of the major challenges facing the mobile
operators and other industry stakeholders is connecting the still unconnected
populations in the developing regions. The mobile economy report also stated that
the increasing level of maturity in developed markets combined with the recent
strong growth in developing markets, means that there will inevitably be a slowdown
in global subscribers.
Figure 10: Global Mobile Profitability (The Mobile Economy Report, 2015)
An increase in competition and regulatory intervention had an impact on global
mobile markets. Regulatory measures to increase competition have included the
introduction of mobile virtual network operators (MVNOs) and mobile number
64
portability. Between 2008 and 2013, Earnings Before Interest, Tax, Depreciation and
Amortization (EBITDA) margins at the global level fell 350 basis points – “The Mobile
Economy report 2015”. The margins trends stabilised in 2014. Operators across
many developed markets have also been taking steps to rationalise their cost bases,
as well as move away from handset subsidies – “The Mobile Economy report 2015”.
These trends has been spearheaded by North American companies; T-Mobile was
one of the first operators to move away from traditional handset subsidies and
develop new financing an device upgrades – “The Mobile Economy report 2015”.
This gives consumers the option of keeping their existing handset or paying for a
new one through an instalment plan.
2.7 Conclusion of the literature Review
Entrepreneurial behaviour continues to be seen as an important path to competitive
advantage and improved performance in firms (Lumpkin and Dress, 1996). This
study will focus on the important role middle-level managers‟ play in the corporate
entrepreneurial strategy of the firm and how middle-level managers ensure that
corporate entrepreneurial strategies are effectively communicated from top-level
managers to operational-level managers. Entrepreneurial behaviour does not occur
in a vacuum, it takes place within the context of the organisation‟s full array of
actions (Dress, Lumpkin, and Covin, 1997).
Floyd and Lane, 2000, argued that middle-level managers‟ entrepreneurial
behaviours involve the sub-processes of championing, synthesizing, facilitating, and
implementing. According to Wang (2008) entrepreneurial firms must foster
65
organisational learning in order to maximise the effect of Entrepreneurial Orientation
on company performance. Corporate Entrepreneurship is important for
organisational survival, growth, profitability and renewal (Sebola and Theerapatvong
2009; Covin and Miles 1999; Limpkin and Dress 1996).
Corporate Entrepreneurship is a type of proactive behaviour through which
organisations seek several outcomes such as the creation of new organisation,
instigation of innovation, and strategic renewal (Sharma and Chrisman, 1999). The
Model of Middle-Level Managers‟ Entrepreneurial Behaviour used in the research
integrates previous work in Corporate Entrepreneurship (Kuratko, Ireland, Covin, and
Hornsby, 2005). This research will compare the outcomes of middle-level managers‟
entrepreneurial behaviour compared to entrepreneurial action within the
telecommunications industry.
Notwithstanding the fact that middle-level managers implement corporate
entrepreneurial strategies of top-level managers, they also identify potential
entrepreneurial opportunities and acquire the necessary resources to exploit those
opportunities. Middle-level managers also evaluate the implementation of corporate
entrepreneurial strategies implemented by operational-level managers focusing on
providing the relevant support to operational-level managers, hence, middle-level
managers endorse corporate entrepreneurial perspectives coming from top-level
executives and sell their value-creating potential to the primary implementers,
operational managers (Kuratko, D.F., Ireland, R.D., Covin, J.G., Hornsby, J.S.,
2005). How entrepreneurial initiatives take place is in the domain of middle-level
66
managers; they play a critical role in the successful implementation of the corporate
entrepreneurial strategy of the firm.
The telecommunications industry within South Africa plays an important role in the
economy. Communications are becoming more important to business globally, the
demand for technological accessibility has increased in households within South
Africa. The impact middle-level managers have within the telecommunications‟
industry on corporate entrepreneurial initiatives will be analysed in the research.
Technological developments within the telecommunications industry have been rapid
over the last decade and corporate entrepreneurial strategies are essential to
maintaining a competitive advantage within the industry. The research will
investigate the important role middle-level managers have in the implementation of
the corporate entrepreneurial strategy within the telecommunications industry in
South Africa.
The hypotheses of the study are as follows:
H1: There is a strong correlation between entrepreneurial orientation and
innovativeness amongst middle-level managers within organisations.
H2: Middle-level managers perceive that there is a strong relationship between
entrepreneurial orientation and organisational performance.
H3: There is a strong correlation between middle-level managers who incorporate
risk taking and pro-activeness within their organisations and entrepreneurial
orientation.
67
Chapter 3: Research Methodology
3.1 Introduction
This chapter will describe the research methodology used in this study. The research
methodology specifies how the study was conducted to reach the stated objectives.
The main objective of this research is to evaluate the role of middle-level managers
on Corporate Entrepreneurship within the telecommunications industry in South
Africa. The study assesses the relationship between Corporate Entrepreneurship
(Innovation, Performance, Risk taking, and Pro-activeness) and Entrepreneurial
Orientation. The methodology explains the relationship between the independent
variables (Innovation, Performance, Risk Taking, and Pro-activeness) and the
dependent variable (Entrepreneurial Orientation). This study followed a quantitative
cross-sectional research method. Cross-sectional research examines information on
many cases at one point in time (Neuman, 2011).
The research adopted the following methodological process based on the Structural
Equation Model (Suhr, 2006):
1 Review the relevant theory and research literature to support the research
model;
2 Specify the research model;
3 Determine model identification;
4 Select the measures for the variables represented in the research model;
5 Collect the data through an online questionnaire;
6 Conduct preliminary descriptive statistical analysis;
68
7 Estimate parameters within the research model;
8 Assess the model fit;
9 Interpret and present results.
The research methodology describes the method used to address the following
hypotheses:
H1: There is a strong correlation between entrepreneurial orientation and
innovativeness amongst middle-level managers within organisations.
H2: Middle-level managers perceive that there is a strong relationship between
entrepreneurial orientation and organisational performance.
H3: There is a strong correlation between middle-level managers who incorporate
risk taking and pro-activeness within their organisations and entrepreneurial
orientation.
3.2 Research Methodology
The research will use a quantitative approach to analyse the data. Quantitative
research methods are needed for more rigorous tests and hypotheses (Perry 2002).
Quantitative research is „Explaining phenomena by collecting numerical data that are
analysed using mathematically based methods (Aliaga and Gunderson, 2000).
Quantitative research is essentially about collecting numerical data to explain a
particular phenomenon, particular questions seem immediately suited to being
69
answered using quantitative research (Aliaga and Gunderson, 2000). Quantitative
research use strategies of enquiry, such as experiments and surveys, and the
research method collects data on predetermined instruments that yield statistical
data (Creswell 2003).
Gathering quantitative research with the use of online questionnaires will provide
information that measures the impact of middle-level managers on Corporate
Entrepreneurship within the telecommunications industry in South Africa. The study
will be able to collect a wide number of data through the quantitative research
method by the use of online questionnaires. The research structure includes the
target population, sampling method, instruments used for data collection and
procedures for data collection.
Quantitative results can be applied to other contexts and situations through statistical
or mathematical modelling, in other words, this type of research can be used to
make predictions about what was being studied, whether phenomena, opinions, or
experiments (Hickerson, B.D., and Beggs, B.A., 2007). This research made use of
probability sampling which will allow statistical references to be made which is the
focus of quantitative research. Experiments used during a quantitative research
method includes, quasi-experiments and correlation studies (Newman, 2011). The
researcher is allowed to study a specific culture in their natural setting over a
specified period by collecting the relevant data using quantitative research (Newman,
2011).
70
3.3 The Research Design
The key focus of the research design is to create a plan to obtain answers for the
research problems. The plan constitutes the overall scheme or program of the
research (Kerlinger and Lee, 2000). The study will use online questionnaires to
gather the relevant data. Online questionnaires will allow for a broader range of data
allowing for a bigger sample of respondents. The online questionnaire was amended
to ensure to suit the telecommunications industry in South Africa. Relevant research
in the academic literature was used as a guideline for the online questionnaire.
The following advantages and disadvantages of an online research questionnaire as
discussed by Wright (2006):
Advantages
1) One advantage of online survey research is that it takes advantage of the
ability of the Internet to provide access to groups and individuals who would
be difficult, if not impossible, to reach through other channels;
2) Online surveys allow a researcher to reach thousands of people with common
characteristics in a short amount of time;
3) Online survey researchers can also save money by saving paper and using
the electronic format instead;
4) It allows the researcher to reach a larger population size;
5) Data collection is also streamlined and rapid.
71
Disadvantages
1) Researchers can encounter problems with regards to sampling, that is, if the
data is self-reported, there is no guarantee that participants from previous
surveys provide accurate demographic or characteristics information;
2) E-mail lists are not accurate which can make it difficult to reach participants;
3) Self-selection bias is another major limitation of online survey research;
4) Online research questionnaires have a low response rate;
5) Online computer security is also a concern when it comes to forwarding online
questionnaires.
The questionnaires will be self-administered which means that respondents
complete it at their own pace within the 3 week deadline. The disadvantage of the
methodological strategy is that it is difficult to ensure that a large group finishes the
questionnaire and the quality of the answers are accurate.
3.4 The Experimental Design
The study will focus on listed and non-listed telecommunications companies within
South Africa. Middle-level managers of the telecommunications companies will be
used for this study with a special focus on their roles in Corporate Entrepreneurship.
72
3.5 The Population and Sample
3.5.1 The Population
The population of this study consisted of middle-level managers (permanently
employed) within the telecommunications industry within South Africa. The
participants of this study comprised of 402 middle-level managers. The target
population only included permanent employees. E-mails with an official letter
containing the instruments, were forwarded to the 402 middle-level managers within
the telecommunications industry. The letter confirmed that the study was about
entrepreneurial orientation. Only 172 questionnaires were completed and returned to
the researcher. The middle-level management employees in the study included
those working in Information Technology, Finance (Credit and Risk), Corporate and
Business Division, Commercial Division and Human Resources. The response
represented a rate of 43%. The middle-level managers were requested to complete
the questionnaire as part of research on Corporate Entrepreneurship.
In formation on the Demographic variables were obtained:
Gender
Level of qualification
Number of years in the organisation
The geographical area of work
Functional area within which the individual works
73
3.5.2 Sample and sampling method
The data for the research was collated by using an online questionnaire. This study
used a non-probability research method. Non-probability sampling is appropriate
when there are time constraints for the research study (Cooper & Schindler, 2008).
The sample focused on listed and non-listed telecommunications companies within
South Africa. The sampling frame consisted of permanent, middle-level management
employees per company. The company data was obtained by using the Information
Technology Website and also company websites.
The sample frame consisted of middle-level managers within the
telecommunications industry in South Africa. This research had a sample size of
n=288 within the telecommunications industry which was appropriate for the study.
This research report has 172 valid usable responses from the online questionnaires.
The study had 113 online questionnaires that were not completed. This resulted in a
response rate of 59.7%. The study used e-mails and telephone calls to encourage
respondents to complete the online questionnaires. Refer to Appendix B for a
snapshot of all the responses.
Participation to the study was voluntary and all participants were informed
accordingly, and they were made aware that they can withdraw from the study at any
time. The participants were aware of the associated risks involved in the research
and that their consent was needed to participate in the research. The 172 responses
received ensured a generalised look across the telecommunications industry within
South Africa. This study focused on the mobile industry (within the telecoms
74
industry), which was an important contributor towards the analysis of the data. Refer
to Appendix C for the names of the companies within the mobile industry that
participated.
3.6 Procedures for gathering data
The online questionnaires included a cover letter describing the study and assuring
confidentiality which was distributed to all respondents. In the mobile industry the
online questionnaires (via a link) was forwarded to senior managers who then
distributed it to middle-level managers. Middle-level managers were given a total of
three weeks to complete the online questionnaires. A follow-up e-mail was forwarded
to senior managers to ascertain the progress of the online questionnaires.
3.7 The Research Instrument
The research used statistical analysis (Barrett and Weinstein, 1998), to evaluate the
relationship between the dependent variable (entrepreneurial orientation) of the
company‟s corporate entrepreneurial strategy and several independent variables
(Innovativeness, Performance, Risk taking and Pro-activeness). The research used
a seven point Likert scale. The data analyses was directly linked to the research
problem. The research will use the Structural Equation Model (SEM) to analyse the
data.
Likert scales are of the most widely used tools in marketing research and
commercial market research; they are used to capture information on a range of
75
phenomena (Dawes, 2007). A study by Finn (1972) reported the means and
variances for scales 1 to 9. This study suggested that 7 and 9 point likert scales
produced comparatively higher scores.
According to Dawes (2007) there are three reasons why the scale format is
influencing data:
The sophistication of analytical methods is increasing;
The data from a survey is not just reported rather they are analysed with the
objective of explaining or accounting for the variance in a dependent variable;
Many organisations periodically track consumer sentiment and often scales
are a major type of the research.
The relation between the original scale values and the real identified scale values is
very close (Dawes, 2007). A study by Burns and Bush (2000) support the treatment
of such scales as if they are equal intervals. Likert scales are desirable from the
viewpoint of obtaining data that will be used for regression analysis (Dawes, 2007). A
seven point likert scale is comparable for analytical tools such as the structural
equation model.
Structural Equation Model:
Is a comprehensive statistical approach to testing hypothesis about relations
among observed and latent variables (Hoyle, 1995);
Is a methodology for presenting, estimating, and testing a theoretical network
of linear relations between variables (Rigdon, 1998);
76
Tests hypothesised patterns of directional and non-directional relationships
among a set of observed (measured) and un-observed (latent) variables
(MacCallum and Austin, 2000).
The purpose of SEM is to account for variation and covariation of the measured
variables (Suhr, 2000). Refer to previous research conducted by Roth and Fillingim
(1988), studying the fitness questionnaire using the SEM model. The SEM analysis
found hardiness mediated by stress and exercise mediated by fitness (Roth, et al.,
1989). This study hypothesises two latent constructs related to wellness, physical,
and mental. SEM therefore compares the relationship, if any exist, between a
dependent and independent variables.
3.7.1 The Structural Equation Model (SEM)
The research used the structural equation model (SEM) to evaluate the data. The
structural equation model (SEM) is one of the most important quantitative techniques
in research today (Lee, 2014). The SEM model proposes that either higher
satisfaction or investment associates with higher commitment and higher levels of
alternatives are associated with lower commitment (Lee, 2014). The SEM literature
tends to use the following terminology (Lee, 2014: 1) In SEM objectivity measured
variables are called Indicators or Manifest variables, 2) Subjective underlying
inferred constructs are called Latent factors, Latent constructs or Latent variables.
This study used SEM to establish if there is a direct link between the dependent
variable (entrepreneurial orientation) and the independent variables (Innovativeness,
Performance, Risk taking and Pro-activeness) – Endogenous Variables.
77
The use of structural equation modelling has been growing in psychology and the
social sciences, providing researchers with a comprehensive means for assessing
and modifying theoretical models (Anderson and Gerbing, 1988). A confirmatory
measurement or factor analysis model specifies the relations of the observed
measures to their posited underlying constructs with the constructs allowed to
intercorrelate freely (Anderson and Gerbing, 1988). An important strength of the
Structural Equation Model is its ability to bring together psychometric and
econometric analyses in such a way that some of the best features of both can be
exploited (Fornell and Larcker, 1981). The Structural Equation Model is tested by two
methods: (1) T-test and (2) Chi square test.
3.7.1.1 T-test
The t-test (the ratio of the parameter estimate to its estimated standard error)
indicates whether individual parameter estimates are statistically different from zero
(Fornell and Larcker, 1981). According to Fornell and Larcker (1981), two problems
are associated with the application of t-tests in structural equation models: (1) the
estimation procedure does not guarantee that the standard errors are reliable and (2)
the t-statistic tests the hypothesis that a single parameter is equal to zero. Although
the computation of standard errors by inverting the Fisher information matrix is less
prone to produce unstable estimates than earlier methods, complete reliance on t-
tests for hypothesis testing is not advisable (Lee and Jennrich, 1979). The use of t-
tests on parameters understates the overall Type I error rate and multiple
comparison procedures must be used (Bielby and Hauser, 1977). The evaluation of
78
the structural models is more commonly based on a likelihood ration test (Joreskog,
1969).
3.7.1.2 Chi-square test
The chi-square statistic compares the “goodness of fit” between the covariance
matrix for the observed data and covariance matrix derived from a theoretically
specified structure (Fornell and Larcker, 1981). According to Cooper and Schindler
(2008), the chi-square test is useful in tests involving nominal data, but can be used
for higher scales. Based on the null hypothesis, the chi-square test can be used to
test for significant differences between the observed distribution of data among
categories and the expected distribution. To test if the two variables are
independent, that is, statistical independence, the chi-square test is the primary
statistic used. The first problem with the chi-square test is that its power is unknown
(Bielby and Hauser, 1977). Knowledge of the power curve of the chi-square is critical
for the theory evaluation in structural equation models because the testing is
organised so that the researcher a priori expects that the null hypothesis will not be
rejected (Fornell and Larcker, 1981). If the power of the chi-square test is low, the
null hypothesis will seldom be rejected and the researcher using structural equation
models may accept a false theory, thus making a Type II error (Fornell and Larcker,
1981). The second limitation of the chi-square test is related to the impact of sample
size on the statistic (Joreskog, 1969).
79
Linear regression was also used for the research. There is a correlation between
SEM and linear regression and both measure the impact of variables against each
other.
Regression is about associations between multiple variables where you believe that
one of the variables (the dependent variable) is explained or predicted by others (the
independent variables), (Lee, 2014). Regression analysis is one of the most widely
used techniques for analysing factor data (Montgomery, Peck, and Vining, 2012). Its
broad appeal and usefulness result from the conceptually logical process of using an
equation to express the relationship between a variable of interest (the response)
and a set of related predictor variables; regression analysis is therefore a statistical
technique for investigating and modelling the relationship between variables
(Montgomery, Peck, and Vining, 2012).
An important objective of the regression analysis is to estimate the unknown
parameters in the regression model; the process is called fitting the model to the
data (Montgomery, Peck, and Vining, 2012). The research will measure the impact of
the dependent variable (entrepreneurial orientation) on the independent variables
(Innovativeness, Performance, Risk taking and Pro-activeness), and if the dependent
variable can explain or predict the independent variables.
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3.8 Procedure for data collection
A good data collection scheme can ensure a simplified and generally more
applicable model whilst a poor data collection scheme can result in serious problems
for the analysis and its interpretation (Montgomery, D.C., Peck, E.A., and Vining,
G.C., 2-12).
The research will establish if there is a direct correlation between middle-level
management and Corporate Entrepreneurship by measuring the relationship
between middle-level management and corporate entrepreneurial strategy. The data
for the research was collated by an online questionnaire and a seven point Likert
scale. The scale represented the dependent (Entrepreneurial Orientation) and
independent variables (Innovativeness, Performance, Risk taking and Pro-
activeness). The company data was obtained through the ITWEB website. With the
reduction of costs for computer hardware and computer software, and the increase
in the usage of the internet and its popularity among society, it will be a viable option
for this research. The research used https://drive.google.com to select the on-line
survey option.
The number of businesses that have moved online and use the Internet as an
advertising tool is an indication of the positive impact of the Internet on
organisations. This study will benefit from this medium since it uses online
questionnaires to gather the relevant data.
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The Internet makes it easier to reach individuals or groups. These groups can be
difficult to reach through alternative channels and online surveys allow the
researcher to save time and gathering data is not delayed. The Internet allows the
researcher to have access to a global audience and populations separated by
geographical distances. The online questionnaires allowed the respondents to
complete the questions within the comfort of their work or home environment.
3.9 Data analysis and interpretation
This study used descriptive and inferential statistics, i.e. descriptive statistics
described the data and inferential statistics described the level of relationship
between dependent and independent variables (Lee, 2014). Descriptive statistics
describe the main characteristics of the respondents: Examples include -
frequencies, means, modes, medians, standard deviation and coefficients of
variation to summarise the characteristics of the data. Descriptive statistics are the
basic analysis of centrality of variables, spread and other distributional features of
variables and other elements describing variables (Lee, 2014).
SEM (Structural Equation Model) is regression type relationship; multiple regressions
take the correlation/covariance and formalise it into a linear relationship, where one
of the variables is assumed to cause the other (Lee, 2014). Structural regression
attempts to make assumptions about direct relationships. The commitment under
structural regression becomes endogenous, resulting in a disturbance. Structural
regression allowed for the extraction of measurement error in the manifest variables
and it better represents the latent variables.
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Descriptive statistics provided the research with various relevant aspects that helps
with a pre-assessment of each variable for data checking purposes. For each
variable, a descriptive analysis can give you information such as the number of
observations with data (N), amount of missing data, Mean (average), Median,
Standard Deviation, Interquartile range (data points at 25th and 75th percentiles of
answers), (Saunders, M, Lewis, P, and Thornhill, A., 2009). Descriptive statistics
helped to identify inappropriate data points in advance.
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Chapter 4: Results of the study
4.1 Introduction
This chapter describes the results of the research analysis in order to provide
answers to the research problems that underpin the study. The research problems
were tested using the Structural Equation Model (SEM). This study used descriptive
and inferential statistics; descriptive statistics described the data and inferential
statistics described the level of relationship between dependent and independent
variables (Lee, 2014). Multiple regression analysis studies the effects and
magnitudes of the effects of more than one independent variable on one dependent
variable (Hair, Anderson, Tathan and Black, 1998; Kerlinger and Lee, 2000).
The data analysis that was obtained will be included in this chapter. The results of
the research will be structured as follows: firstly, the geographical location of the
respondents used in the research is described; secondly, the area of the business
where the respondents work is described. Thereafter, the SEM (Structural Equation
Model) will be used to analyse the data, using descriptive stats e.g. means, medians,
measures of variability, standard deviations for asymmetry used, and Cronbach‟s
coefficient alpha for internal consistency reliability.
The aim of this study, as mentioned in chapter 1, is to determine the role of middle-
level managers on Corporate Entrepreneurship within the telecommunications
industry within South Africa. Corporate Entrepreneurship is measured by analysing
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the independent variables (Innovativeness, Performance, Risk taking and Pro-
activeness) and dependent variable (Entrepreneurial orientation).
4.1.1 Reliability
The research will measure reliability for the different scales derived from the SEM
(Structural Equation Model).
4.1.2 Validity
The quantitative research methodology relate to the positivist approach to social
research. A positive approach implies that the researcher begins with a cause-effect
relationship logically derived in general theory and then engages in precise
measurements of a social world (Neuman, 2011, pp. 90-121). The quantitative
research method allows the researcher to remain detached, neutral and objective,
examining the evidence and replicating other research in order to test empirically
and confirm the laws of social life as outlined in the theory presented (Neuman,
2011). Factor analysis will be used to check the validity of the study (Cooper and
Schindler 2008). The Structural Equation Model (SEM) was used to assess the
validity of the research results. Factor analysis was performed on all the items of the
scales to measure each of the constructs of the model.
4.1.3 Assumptions of the study
This section describes the score distribution of the study using comparisons of the
different scales used in terms of their descriptive statistics to see if they do meet the
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required statistical testing. The researcher can use this information to make the
relevant adjustments to the measurement scales.
4.1.4 Group Comparability
This study focused on the telecommunications industry in South Africa concentrating
on four sectors within this industry. The researcher used the SEM model to test for
the relationship between the dependent variable (Entrepreneurial Orientation) and
the independent variables (Innovation, Performance, Risk taking, and Pro-
activeness); any deviation from the ideal test will result in the combined sample
being problematic. The sample compares the entrepreneurial orientation of middle-
level managers within the telecommunications industry in South Africa. The research
compared the correlation of the dependent variable and the independent variables in
order to identify the importance of entrepreneurship within this industry.
4.1.5 Testing the Hypothesis
The hypotheses of the study were tested by using regression analysis based on the
Structural Equation Model (SEM), by the empirically derived scales. The hypotheses
were framed as research hypotheses rather than statistical null and alternative
hypotheses. The results obtained during the research, i.e. test of the research
hypotheses served as the empirical evaluation of the model used.
H1: There is a strong correlation between entrepreneurial orientation and
innovativeness amongst middle-level managers within organisations.
H2: Middle-level managers perceive that there is a strong relationship between
entrepreneurial orientation and organisational performance.
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H3: There is a strong correlation between middle-level managers who incorporates
risk taking and pro-activeness within their organisations and entrepreneurial
orientation.
4.2 Sample description
4.2.1 Organisational characteristics: gender, qualifications, work experience,
and functional areas.
The gender distribution of the respondents
Data was collected from a total of 172 respondents out 402 online questionnaires
forwarded to middle-level managers. The respondents consisted of 98 males (57%),
and 74 females (43%). The figure below shows the sample results between the two
gender groups. The sample of this study indicates that more than half (57%) of
respondents were male middle-level managers.
The body of data on the status of women in leadership suggests black females
continue to be the most poorly represented group in leadership and management
positions although all women in South Africa face the proverbial glass‐ceiling
phenomenon. Moreover, South Africa is dominated by white males in management
(Booysen, 1999a). Research also suggests women in South Africa face similar
barriers to their progress and upward mobility as their female counterparts in the rest
of the world (Erwee, 1994; Erasmus, 1998; and Mathur‐Helm, 2002).
87
Table 4: Gender distribution of the respondents (n=172)
Gender Count Percent (%)
Male 98 57%
Female 74 43%
Total 172 100%
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Figure 11 – Gender Distribution
The respondent’s qualifications
The qualification of the respondents ranged from 36% with Bachelor‟s degrees and
34% with Honour‟s degrees; an indication that most middle-level respondents have
post matric qualifications. The telecommunications industry identified the importance
of skilled middle-level managers on enhancing entrepreneurship within the industry.
98, 28%
74, 22%
172, 50% Male
Female
Total
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Table 5: Distribution of respondents educational level (n=172)
Educational level Count Percent (%)
Matric 8 5%
National Diploma 11 6%
Bachelor Degree 62 36%
Honours Degree 58 34%
Master‟s Degree 31 18%
Doctorate Degree 2 1%
Other 0 0%
Total 172 100%
Figure 12: Respondents Qualifications
8 11
62
58
31
2 0
172
Respondents Qualifications
Matric
National Diploma
Bachelor Degree
Honours Degree
Master’s Degree
Doctorate Degree
Other
Total
90
The number of years worked by the respondents
More experienced workers are less likely to be emotionally disturbed by negative
incidents because they do not perceive the negative consequences of each and
every non-fulfilment as dramatic (Bedeian, Ferris, & Kacmar, 1992). More
experience workers are more likely to accept changes within the work environment
and indirectly react positively towards entrepreneurial initiatives. The research
results indicate that 51% of middle-level managers had 10 years or more experience
within the telecommunications industry.
Table 6: Distribution of years worked by respondents (n=172)
Years Worked Count Percentage
3 years or less 10 6%
4-6 years 16 9%
7-9 years 58 34%
10 years or more 88 51%
Total
172 100%
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Figure 13: Years worked by respondents
Functional areas of the respondents
It is not surprising that 40% of the respondents were from the IT / Networks /
Operations departments, a key focus area of the telecommunications industry within
South Africa. Another key focus area within the telecommunications industry is the
finance department, closely linked to the credit vetting of applications. Analysis of
both consumer and business applications is the core function of the finance
department and responsible lending is paramount to the financial stability of the
industry.
10 16
58
88
172
Respondents Years Worked
3 years or less
4-6 years
7-9 years
10 years or more
Total
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Table 7: Distribution of functional areas of respondents (n=172)
Division Count Percentage
Finance 49 28%
Human Resources 8 5%
IT / Networks / Operations 69 40%
Product & Services 29 17%
Other 17 10%
Total 172 100%
Figure 14: Functional areas of respondents
49 8
69
29
17
172
189
Functional Areas of Respondents
Finance
Human Resources
IT / Networks / Operations
Product & Services
Other
Total
93
4.2.2 Statistical analysis of the variables
Structural equation modelling (SEM) is one of the most important quantitative
techniques in research today, gaining widespread use and popularity in many
research areas including management studies, medicine, biology, sociology,
psychology, education, and engineering (Lee, 2014). Results of this research are
based on various tables within SEM. Corporate Entrepreneurship were measured
using a 7-pont Likert-type scale, where high scores reflect high values on the
construct.
Table 8: Summary of fit data
Indices obtained from Structural Equations Analysis model 1 (N=172)
The CALIS Procedure
Covariance Structure Analysis: Maximum Likelihood Estimation
Fit Summary
Absolute Index Chi-Square 1096.9979
Chi-Square DF 145
Pr > Chi-Square <.0001
Standardized RMR (SRMR) 0.1262
Parsimony Index RMSEA Estimate 0.1657
RMSEA Lower 90% Confidence Limit 0.1567
RMSEA Upper 90% Confidence Limit 0.175
Akaike Information Criterion 1186.9979
Bozdogan CAIC 1388.6267
Schwarz Bayesian Criterion 1343.6267
Incremental Index Bentler Comparative Fit Index 0.584
Bentler-Bonett Non-normed Index 0.5095
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The fit table compare the actual data covariance to the predicted covariance
produced by the SEM model. The chi-square statistic, which has a p-value, is the
most basic measure of whether the actual and predicted covariances are similar.
A significant p-value suggests significant differences between the actual and
predicted covariances, which is technically bad if true because you optimally want
the actual and predicted covariances to be exactly equal (Lee, 2014). According to
Hoyle (1995), the goodness-of-fit index is seen as the most common index of fit
between the model and the data. Fit indices varying between 1.0 and 0.90 are
commonly seen as acceptable indices for a model to be viewed as consistent with
the estimated data (Hoyle, 1995). The indices in figure 1 therefore indicate a good fit
with the data with a high level of parsimony.
The results of the chi-square conclude that the chi-square statistic values for all the
variables are large and the corresponding p-values are small, an indication that the
proposed theory does not fit reality well. The RMSEA index values for all the
variables and second order are all greater than 0.05, indicating a weak model fit.
The p-value (which in table 5 is designated the Pr > Chi-Square). The p-values give
the researcher definite cut-offs, a benchmark to evaluate the significance of by the
measurement, i.e. if the p-value is less than .05. It will have statistical significance to
the findings of the research.
If the p-value is low enough in the research, i.e. it is <.0001, then it can be concluded
that a straight line fits the data sufficiently to continue with the study. In table 5 the p-
value is <.0001, which is lower than .05 or even .01, we can say that based on the
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estimates of error, this Chi-Square statistic is significant at a level of .01, giving the
researcher one extra basis for accepting that a straight line fits the data. Taking into
account the indices in table 5, it can be stated that the causal model indicates a good
fit with the data.
Table 9: Satisfaction Cronbach Analysis
T -Test Analysis of the variables (n=172)
Variable N Mean Std Dev Sum Minimum Maximum
Q7 172 6.12209 1.10933 1053 1 7
Q8 172 5.70349 1.30648 981 1 7
Q11 172 3.78488 1.92709 651 1 7
Q12 172 3.83721 2.07948 660 1 7
Q13 172 5.77326 1.16518 993 1 7
Q14 172 5.70349 1.10786 981 2 7
Q15_Innovation 172 5.6686 1.23807 975 1 7
Q16_Performance 172 5.47093 1.39098 941 1 7
Q17_Risk_taking 172 5.96512 1.12336 1026 2 7
Q18 172 5.80814 1.21074 999 2 7
Q19 172 5.73256 1.315 986 1 7
Q20 170 5.68235 1.26127 966 1 7
Q21_Proactiveness 172 5.47093 1.277 941 1 7
Q23_Innovation_3 172 6.27907 1.0885 1080 1 7
Q24 172 5.47674 1.35704 942 1 7
Q25 172 5.0814 1.56134 874 1 7
Q26 172 5.78488 1.19707 995 1 7
Q27 172 4.94186 1.78594 850 1 7
Q28 172 5.97674 1.30206 1028 1 7
Q29 172 5.80233 1.10628 998 1 7
Correlation analysis indicates the strength of the linear association. It is a
measurement between -1 and +1. If the correlation is +1 there will be a perfect
positive linear association and the scores between 0 and +1 indicate how close to
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positive linearity the analysis will get. A correlation of -1 indicates perfect negative
linear associations and an association close to zero indicates no linear association.
Means is a measurement where the research will establish weather a quantitative
dependent variable differs across various possible categories in one or more
categorical variable. This method of analysis wants to compare whether a certain
dependent variable differs between multiple independent groups of observations.
The reason for comparisons in groups is that a set of discrete categorical groupings
in the data are the cause of differences in some other continuous dependent
variable. The research can test whether a dependent variable will differ between
groups; this can be tested in isolation.
This research tested whether the independent variables: innovation, performance,
risk taking and pro-activeness have an impact on the dependent variable -
entrepreneurial orientation (H1, H2, and H3). The t-test will allows for a statistical
significance test for whether the difference in the mean is large. The aim is to assess
whether the difference in the mean is zero which is an indication that the
independent variables do not differ significantly on the dependent variable.
Table 8 presents the descriptive statistics of the independent variables to be used in
testing the researcher‟s model. There is no significant difference between the mean
scores of innovation, performance, risk taking, and pro-activeness (independent
variables), the mean scores range between 5 and 6. The standard deviation scores
are also consistent amongst the independent variables (a midpoint value of 1.2). The
mean values of the scales are all close to the scale midpoint value of 5.8. The
midpoint value is considered as a neutral point with values greater than 5.8 indicative
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of respondents‟ positive perceptions of the entrepreneurial orientation of their
organisation. It appears that the mean entrepreneurship scores of the
telecommunications industry tend to range from somewhat higher than neutral,
towards positive or high. The differences in the means amongst the independent
variables are effectively zero concluding that the independent variables do not differ
significantly on the dependent variable (entrepreneurial orientation).
Table 10: Entrepreneurial Orientation Cronbach Analysis (n=172)
Table 9 represents the descriptive statistics of the dependent variable (OE) to be
used to test the researcher‟s model. There is no significant difference between the
mean scores of Q9 and Q10 (entrepreneurial orientation). The average mean scores
for both questions are 5.9. The standard deviation scores are consistent (similar to
2 Variables: Q9_EO1 Q10_EO2
Simple Statistics
Variable N Mean Std Dev Sum Minimum Maximum
Q9_EO1 172 5.97674 1.08122 1028 1 7
Q10_EO2 172 5.9186 1.17692 1018 1 7
Pearson Correlation Coefficients, N = 172
Prob > |r| under H0: Rho=0
Q9_EO1 Q10_EO2
Q9_EO1 1 0.76596
<.0001
Q10_EO2 0.76596 1
<.0001
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table 6 – tested the independent variables). There is a strong correlation between
EO, dependent variable and its underlying constructs. The correlation of EO is 1 in
Q9 and also 1 in Q10 (which is a perfect linear relationship). The dependent variable
is perfectly associated with itself.
There is supportive evidence of the construct validity of EO.
Table 11: Mean score correlation (n=172)
Table 10 compares the means scores for Q11, Q12, Q13, and Q14. The mean
scores for Q11 and Q12 are lower than the mean scores for Q13 and Q14 with an
average mean score of 4.7. Q11 and Q12 are below the average mean score of 4.7,
indicative that there is a difference between the pair of questions. The average
standard deviation for Q11, Q12, Q13, and Q14 is 1.6 stating that there is no
significant difference between the standard deviation scores.
The CORR Procedure
4 Variables: Q11 Q12 Q13 Q14
Simple Statistics
Variable N Mean Std Dev Sum Minimum Maximum
Q11 172 3.78488 1.92709 651 1 7
Q12 172 3.83721 2.07948 660 1 7
Q13 172 5.77326 1.16518 993 1 7
Q14 172 5.70349 1.10786 981 2 7
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Table 12: Comparison analysis of the dependent and independent variables (n=172)
Variable N Mean Std Dev Sum Minimum Maximum
Q7 172 6.12209 1.10933 1053 1 7
Q8 172 5.70349 1.30648 981 1 7
Q9_EO1 172 5.97674 1.08122 1028 1 7
Q10_EO2 172 5.9186 1.17692 1018 1 7
Q11 172 3.78488 1.92709 651 1 7
Q12 172 3.83721 2.07948 660 1 7
Q13 172 5.77326 1.16518 993 1 7
Q14 172 5.70349 1.10786 981 2 7
Q15_Innovation 172 5.6686 1.23807 975 1 7
Q16_Performance 172 5.47093 1.39098 941 1 7
Q17_Risk_taking 172 5.96512 1.12336 1026 2 7
Q18 172 5.80814 1.21074 999 2 7
Q19 172 5.73256 1.315 986 1 7
Q20 170 5.68235 1.26127 966 1 7
Q21_Proactiveness 172 5.47093 1.277 941 1 7
Q22_Innovation_2 172 6 1.21395 1032 1 7
Q23_Innovation_3 172 6.27907 1.0885 1080 1 7
Q24 172 5.47674 1.35704 942 1 7
Q25 172 5.0814 1.56134 874 1 7
Q26 172 5.78488 1.19707 995 1 7
Q27 172 4.94186 1.78594 850 1 7
Q28 172 5.97674 1.30206 1028 1 7
Q29 172 5.80233 1.10628 998 1 7
Q30_Performance 172 5.67442 1.20856 976 1 7
Simple Statistics
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Table 11 compare the mean scores of the dependent variable (entrepreneurial
orientation) with the mean scores of the independent variables (innovation,
performance, risk taking, and pro-activeness) to establish if there is a causal link
between the two variables. Table 12 have the same comparison but only compares
the mean scores of the independent variables. The average mean score for the
dependent variable is 5.9 and the average mean score for the independent variables
is 5.7. The difference in the means between the dependent variable and the
independent variables is 0.2. The aim in any t-test is to establish if the difference in
the means is zero. The confidence interval for the difference will tell the researcher
whether to accept or reject the proposition. If the interval lies entirely above or below
zero, the researcher can conclude that the means are significantly different. This
research has a difference of 0.2 between the dependent variable and the
independent variables which is effectively zero. The average standard deviation
score of the dependent variable is 1.2 compared to the average standard deviation
score of the independent variables 1.2; the difference between the two variables is
Variable N Mean Std Dev Sum Minimum Maximum
Q15_Innovation 172 5.6686 1.23807 975 1 7
Q16_Performance 172 5.47093 1.39098 941 1 7
Q17_Risk_taking 172 5.96512 1.12336 1026 2 7
Q21_Proactiveness 172 5.47093 1.277 941 1 7
Q22_Innovation_2 172 6 1.21395 1032 1 7
Q23_Innovation_3 172 6.27907 1.0885 1080 1 7
Q30_Performance 172 5.67442 1.20856 976 1 7
Simple Statistics
Table 13: Comaprisons of the indepenedent variables
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zero. There is no significant difference between the standard deviation scores of the
dependent variable and the independent variables. The proposition is therefore
accepted thus supporting H1, H2, and H3.
Covariance arrows in SEM
Covariances are the basis for both multiple regression and SEM. It is fair to say that
covariances are the heartland of SEM (Lee, 2014). The only data that SEM needs is
the covariance between each variable; no information is actually required to run an
analysis. An important reminder is that association does not prove causality just
which two variables happen to occur in some relatively synchronised way (Lee,
2014). The basis for SEM model is the presentation of the researcher‟s pre-
conceived ideas about how the variables relate to one another.
Figure 15: Correlation between variables (Lee, 2014)
I.V.:
Innovation
D.V.:
EO
D.V.:
EO
I.V.:
Performance
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Covariances are the correlations scaled for the standard deviations of the variables
(Lee, 2014). In table 8 we concluded that there are no significant differences
between the standard deviation scores of the dependent variable (entrepreneurial
orientation) and the independent variables (innovation, performance, risk taking, and
pro-activeness). There is a strong correlation between entrepreneurial orientation as
the dependent variable and the four dependent variables supporting the evidence of
the construct validity of EO. A correlation does exist between the dependent variable
and the independent variables (Figure 5) confirming H1, H2, and H3 of the research.
D.V.:
EO
D.V.:
EO
I.V.:
Pro-activeness
I.V.:
Risk taking
103
N=172, findings within the research must be treated with caution.
Interpretation for table 13:
6 – 10% is seen as a useful conceptual correlation
11 – 15% is seen as a moderate conceptual correlation
16 – 24% is seen as a high conceptual correlation
>25% is seen as a very high conceptual correlation
Column1 Q7 Q8 Q9_EO1 Q10_EO2 Q15_Innovation Q16_Performance Q17_Risk_taking Q21_Proactiveness Q22_Innovation_2 Q23_Innovation_3 Q30_Performance
Q7 1 0.64651 0.63621 0.63921 0.30214 0.48173 0.53371 0.49996 0.60795 0.43655 0.43984
<.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001
Q8 0.64651 1 0.54155 0.53568 0.42336 0.4731 0.44715 0.54687 0.57889 0.46975 0.48664
<.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001
Q9_EO1 0.63621 0.54155 1 0.76596 0.39175 0.49337 0.58191 0.5247 0.5391 0.4279 0.50883
<.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001
Q10_EO2 0.63921 0.53568 0.76596 1 0.52319 0.50937 0.5994 0.62876 0.50755 0.4378 0.5034
<.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001
Q15_Innovation 0.30214 0.42336 0.39175 0.52319 1 0.60731 0.53826 0.55425 0.38131 0.46392 0.46291
<.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001
Q16_Performance 0.48173 0.4731 0.49337 0.50937 0.60731 1 0.66177 0.59542 0.52295 0.39935 0.50918
<.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001
Q17_Risk_taking 0.53371 0.44715 0.58191 0.5994 0.53826 0.66177 1 0.55778 0.60894 0.51018 0.50847
<.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001
Q21_Proactiveness 0.49996 0.54687 0.5247 0.62876 0.55425 0.59542 0.55778 1 0.66393 0.56121 0.64936
<.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001
Q22_Innovation_2 0.60795 0.57889 0.5391 0.50755 0.38131 0.52295 0.60894 0.66393 1 0.68155 0.55006
<.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001
Q23_Innovation_3 0.43655 0.46975 0.4279 0.4378 0.46392 0.39935 0.51018 0.56121 0.68155 1 0.48289
<.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001
Q30_Performance 0.43984 0.48664 0.50883 0.5034 0.46291 0.50918 0.50847 0.64936 0.55006 0.48289 1
<.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001 <.0001
Table 14: Pearson Correlation Coefficients, N = 172
Prob > |r| under H0: Rho=0
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H1: There is a strong correlation between entrepreneurial orientation and
innovativeness amongst middle-level managers within organisations.
The first research problem investigates the significant relationship between
entrepreneurial orientation and innovation (H1).
The common variance between Q15, innovation, and Q9 + Q10,
entrepreneurial orientation is 39% (0.39) and 52% (052).
The common variance between Q22, innovation, and Q9 + Q10,
entrepreneurial orientation is 54% (0.54) and 51% (0.51).
The common variance between Q23, innovation, and Q9 + Q10,
entrepreneurial orientation is 43% (0.43) and 44% (0.44).
Conclusion: The relationship between entrepreneurial orientation and innovation is
modest to average. The relationship between entrepreneurial orientation and
innovation is stronger at Q22, 54% and 51% respectively. The relationship between
the two variables is minimal at Q15, 39% and 52%, although an increase to 52% is
evident. There is minimal increase in the explained variances of innovation
generation (Q15 = 13% increase, Q22 = 3% decrease, and Q23 = 1% increase).
Innovativeness is positively related to EO. If an organisation is serious about
developing its internal environment to promote entrepreneurial activity then it must
seek to measure the specific dimensions associated with an innovative environment
(Kuratko, Hornsby, and Covin, 2014). The Corporate Entrepreneurship Assessment
Instrument (CEAI) tool developed by Hornsby, Kuratko, and Zahra (2002), assess
the five major dimensions critical to creating an entrepreneurial innovative
environment. Innovation is now widely recognised as the path to competitive
105
advantage and success in organisations of all types and sizes (Kuratko et al., 2012).
A sustainable Corporate Entrepreneurship strategy will drive organisations towards
innovation needed to operate in the challenging global economy (Kuratko, 2009).
Innovation assists organisations to be ahead of their competitors, gaining
competitive advantage that leads to improved financial results. Innovative behaviour
within an organisation enhances its entrepreneurial orientation, hence, a positive
correlation between the independent (innovation) and dependent variable
(entrepreneurial orientation).
H2: Middle-level managers perceive that there is a strong relationship between
entrepreneurial orientation and organisational performance.
The second research problem investigates the significant relationship between
entrepreneurial orientation and organisational performance (H2).
The common variance between Q16, organisational performance and Q9 +
Q10, entrepreneurial orientation, is 49% (0.49) and 51% (0.51).
The common variance between Q30, organisational performance, and Q9 +
Q10, entrepreneurial orientation, is 51% (0.51) and 50% (0.50).
Conclusion: There is support for H2 that moderates the relationship between
entrepreneurial orientation and organisational performance. The relationship
between entrepreneurial orientation and organisational performance is strong at Q16
(51%), and Q30 (51%). There is minimal change in the explained variance of
organisational performance at Q16 – a 2% increase. There is a 1% decrease in the
explained variance of organisational performance at Q30.
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The thrust argument for a positive influence of EO on performance is related to the
first-mover advantages and the tendency to take advantage of emerging
opportunities implied by EO (Wiklund, 2000). Zahra (1991) found a positive and
growing correlation between Corporate Entrepreneurship and performance during
three consecutive years. Zahra and Covin (1995) produced more solid findings and
were able to show that EO influenced performance during each year of the five years
studied. The research findings suggest a positive relationship between EO and
performance. The results also corroborate the findings from previous research and
provide additional grounding for statements about the positive effects of EO
(Wiklund, 2000). The results of this study suggest that EO contributes to both
growth and financial performance thereby, affirming a research study conducted by
Zahra, 1993b; Zahra and Covin, 1995.
H3: There is a strong correlation between middle-level managers who
incorporates risk taking and pro-activeness within their organisations and
entrepreneurial orientation.
The third research problem investigates the significant relationship between
entrepreneurial orientation, risk taking and pro-activeness (H3).
The common variance between Q17, risk taking, and Q9 + Q10,
entrepreneurial orientation, is 58% (0.58) and 60% (0.60).
The common variance between Q21, pro-activeness, and Q9 + Q10,
entrepreneurial orientation, is 52% (0.52) and 63% (0.63).
107
Conclusion: The relationship between entrepreneurial orientation and risk taking is
even stronger at 60%, and the relationship between entrepreneurial orientation and
pro-activeness is also stronger at 63%. There is minimal change in the explained
variance of risk taking at Q17, 2%. There is a significant change in the explained
variance of pro-activeness at Q21, 9%.
According to Miller (1983), Covin and Slevin (1991), EO can be defined as implying
the presence of organisational behaviour reflecting risk taking, innovativeness, and
pro-activeness. Consistent with Lumpkin and Dress (1996) definition of EO and
Covin and Slevin‟s (1991, p. 8) assertions involving this phenomena, organisational
behaviour is regarded as the means through which an EO can be recognised
(Ireland, Covin, and Kuratko, 2009). The pursuit of entrepreneurial opportunities
necessitates the identification (being pro-active) of resources needed to convert the
entrepreneurial concept into a business reality (Kuratko, Ireland, Covin, and
Hornsby, 2005). Knowing which resources will be needed to pursue any given
entrepreneurial opportunity will be difficult inasmuch as entrepreneurial initiatives
tend to evolve in their scope, content, and focus as they develop (McGrath &
MacMillan, 1995). Corporate Entrepreneurship is a type of pro-active behaviour
through which organizations seek several outcomes such as the creation of a new
organization, instigation of innovation, and strategic renewal (Sharma & Chrisman,
1999). Concluding that the independent variables (risk taking and pro-activeness)
does have a positive relationship with the dependent variable (EO).
4.3 Summary of the results
The results chapter of the research present the data analysis according to the
following headings: sample description, the measurement aspects of SEM, and
108
analysis of the results based on the model. The presentation of the results included
graphs, data tables, and data figures to present the results of the data analyses
performed. The results of the model confirmed the following in terms of the three
hypotheses:
Hypothesis 1: The research hypothesis is supported, although, moderate to high.
The results indicated a modest to strong linear relationship between EO and
innovation. EO explained 39% and 52% respectively of the covariance in innovation.
The highest common variance between innovation and EO is 54%.
Hypothesis 2: The research hypothesis is supported, although, indicates not a
strong relationship. The results indicated that there is a linear relationship between
EO and organisational performance. EO explained 49% and 51%respectively of the
covariance in organisational performance. The highest common variance between
organisational performance and EO is 51%.
Hypothesis 3: The research hypothesis is supported, i.e. a strong relationship exist.
The results indicate that there is a strong linear relationship between EO and risk
taking, and a strong linear relationship between EO and pro-activeness. EO
explained 58% and 60% of the covariance in risk taking. EO also explained 52% and
63% of the covariance in pro-activeness. The highest common variance between risk
taking and EO is 60%, and the highest common variance between pro-activeness
and EO is 63%.
The research results supports H1, H2, and H3 indicating a correlation between the
dependent variable (entrepreneurial orientation) and the independent variables
(innovation, performance, risk taking, and pro-activeness).
109
Table 15: Summary of the results of the research hypothesis tests
Research Hypothesis Description of path Outcome
H1
A positive correlation exists
between innovation within
the telecommunications
industry and
entrepreneurial orientation
(EO).
EO Telecommunications
industry innovation
Supported
H2
A positive correlation exists
between organisational
performance within the
telecommunications
industry and
entrepreneurial orientation
(EO).
EO organisational
performance within the
telecommunications
industry
Supported
H3
A positive correlation exist
between risk taking and
EO risk taking within the
telecommunications
industry
Supported
110
entrepreneurial orientation
(EO)
A positive correlation exist
between pro-activeness
and entrepreneurial
orientation (EO)
EO pro-activeness
within the
telecommunications
industry
Supported
111
Chapter 5: Discussion, Conclusions, and Recommendations
5.1 Introduction
In this final chapter, the results of this study will be evaluated and interpreted with
respect to the three hypothesis / research problems. Thereafter, the contributions of
the present study, limitations of the study, and recommendations for future research
will be made.
5.2 Discussion of the results
5.2.1 Statistical analysis of the study
The research used a quantitative approach which involved descriptive analysis for
data collation. The analysis reveals for the entrepreneurial orientation (EO) scale
above the midpoint scores across items for the telecommunications industry. This is
based on the three independent variables that correlate to EO: innovativeness,
organisation performance, risk taking and pro-activeness.
Innovation at Q15 is below the midpoint score (4) for the telecommunications
industry; organisational performance, risk taking and pro-activeness are all above
the midpoint scores. The total scores for EO are above the midpoint score (4),
suggesting that middle-level managers has medium to high levels of EO.
Descriptive analysis reveals that innovativeness is above the midpoint score, but it is
below the midpoint score at Q15, suggesting that middle-level managers have low to
medium levels of innovation within the telecommunications industry. Middle-level
managers have lower levels of innovation at Q15 within the telecommunications
industry.
112
Conclusion: middle-level managers have low to medium levels of innovation within
the telecommunications industry.
Descriptive analysis for organisational performance is above the midpoint score.
Middle-level managers contribute towards an increase in organisational performance
through entrepreneurial orientation initiatives. This suggests that middle-level
managers within the telecommunications industry contribute towards organisational
performance by incorporating corporate entrepreneurial strategies within their firms.
Conclusion: middle-level managers contribute towards an increase in firm
performance.
The descriptive analysis for risk taking and pro-activeness is above the midpoint
score for entrepreneurial orientation. The scores are above 50% for all the questions
related to risk taking and pro-activeness. Middle-level managers who are risk averse
and pro-active to incorporate Corporate Entrepreneurship strategies within their
organisations contribute to an increase in firm performance.
Conclusion: middle-level managers within the telecommunications industry are risk
averse and proactive.
The following relational hypotheses were tested:
Hypothesis 1: There is a strong correlation between entrepreneurial orientation and
innovativeness amongst middle-level managers within organisations.
Hypothesis 2: Middle-level managers perceive that there is a strong relationship
between entrepreneurial orientation and organisational performance.
Hypothesis 3: There is a strong correlation between middle-level managers who
incorporates risk taking and pro-activeness within their organisations, and
entrepreneurial orientation.
113
5.2.2 First Research Problem
The first research problem relates to the possible significant relationship between
entrepreneurial orientation and innovativeness amongst middle-level managers
within the telecommunications industry. Innovation amongst middle-level managers
shows a negative (39%) to positive (52%) common covariance at Q15.
This shows a low to medium level of innovation amongst middle-level managers
within the telecommunications industry. Higher levels of innovation exist amongst
middle-level managers at Q22 (54%) and (51%) and at Q23 (43%) and (44%). This
would mean that middle-level managers are innovative within the
telecommunications industry.
This significant relationship between entrepreneurial orientation and innovativeness
amongst middle-level managers within the telecommunications industry is confirmed
by previous studies, Kuratko et al., 2005.
5.2.3 Second Research Problem
The second research problem states that middle-level managers perceive that there
is a strong relationship between entrepreneurial orientation and organisational
performance. The correlation matrix shows that organisational performance had a
significant common variance of > 25%, seen in table 10. The common variance for
organisational performance is between 49% and 51%. There is a correlation
between entrepreneurial orientation and organisational performance.
114
Previous researchers, (Rauch, Wiklund, Lumpkin and Frese, 2001), reveal that there
is a significant relationship between entrepreneurial orientation and organisational
performance.
5.2.4 The Third Research Problem
The third research problem investigates the relationship between middle-level
managers who incorporates risk taking and pro-activeness within their organisations,
and entrepreneurial orientation. The common variances between risk taking and
entrepreneurial orientation are strong (>25%) at Q17 – 58% and 60%, indicating that
there is a correlation between being risk averse and entrepreneurial orientation.
The common variances between pro-activeness and entrepreneurial orientation are
strong (>25%) at Q21 – 52% and 63%, indicating that there is a correlation between
being proactive and entrepreneurial orientation. This is an indication of a positive
relationship between risk taking and pro-activeness, and entrepreneurial orientation.
Previous studies by Lumpkin and Dress, (2009) and Lumpkin and Dress, (1996)
confirms that there is a strong correlation between middle-level managers who
incorporates risk taking and pro-activeness within their organisations and
entrepreneurial orientation.
5.3 Contributions of the study
This research contributes towards current literature on Corporate Entrepreneurship.
This study builds on the Model of Middle-level Managers Entrepreneurial Behaviour,
(Kuratko, Ireland, Covin, and Hornsby, 2005). The study contributes to the body of
115
knowledge of entrepreneurship by identifying a set of constructs that should be
present for Corporate Entrepreneurship to occur. The results of this study also show
the importance of middle-level managers in the Corporate Entrepreneurship strategy
of the firm. It is crucial for firms that middle-level managers support Corporate
Entrepreneurial initiatives and that Corporate Entrepreneurship is supported by the
firm‟s policies. This study focussed on Corporate Entrepreneurship within the
telecommunications industry in South Africa; the important role middle-level
managers play in Corporate Entrepreneurship within this industry.
The study contributed to the literature of Corporate Entrepreneurship by focusing on
the role of middle-level managers on the corporate entrepreneurial strategy of the
firm. The study also contributed towards previous studies, e.g. Hornsby, J.S.,
Kuratko, D.F. and Zahra, S.A. (2002): Middle managers‟ perception of the internal
environment for Corporate Entrepreneurship: assessing a measurement scale. The
study provided an understanding of what motivates middle-level managers to create
a culture of entrepreneurship within their organisations.
The focus of previous research has been based on a generalisation of Corporate
Entrepreneurship within organisations, however, this research focused on the
specific impact of middle-level mangers on the corporate entrepreneurial strategy
within the telecommunications industry.
A research report by Thokozani Nkosi (Wits 2011) focused on Corporate
Entrepreneurship and organisational performance in the Information and
Communications Technology Industry: focusing primarily on the impact of Corporate
Entrepreneurship on the performance of the organisation. This research differed by
concentrating on the managerial aspect within an organisation and how it impacted
116
the Corporate Entrepreneurial strategy. This study that concentrated on the
important role middle-level manager‟s play in the relationship between top-level
managers and operational-level managers, will add value to current studies.
The research findings states that there is a low to medium correlation between EO
and innovation, providing support for the proposition that if organisations are to be
innovative, they need EO. This study also found that middle-level managers who are
innovative, contribute to an increase level of Corporate Entrepreneurship within their
firms. Overall, this finding suggests that the telecommunications industry must invest
in creating a culture of innovation amongst middle-level managers.
This research also shows a medium to strong relationship between organisational
performance and entrepreneurial orientation. The results suggest that Corporate
Entrepreneurship initiatives within the telecommunications industry in South Africa
lead to an increase in organisation performance. The research has revealed the
importance of entrepreneurial orientation (EO) in organisational performance, and
provides additional support that there is a strong positive effect of EO on
organisational performance (Zahra and Covin 1995; and Covin and Slevin 2008).
Corporate Entrepreneurship initiatives are a key driver for an increase in firm
performance within the telecommunications industry. The results of this study show
that the South African telecommunications industry regulatory framework has low to
medium regulatory factors present to create a culture of innovation.
The results further revealed that there is a strong correlation between middle-level
managers who incorporate risk taking and pro-activeness within their firms, and
entrepreneurial orientation. There is a positive moderation effect for regulation on the
relationship between risk taking and pro-activeness within the telecommunications
117
industry. The finding is in line with the expectation of the researcher that a positive
moderation result exists between middle-level managers who incorporate risk taking
and pro-activeness within their organisations, and EO.
The literature supports the view that there is a correlation between the independent
variables (innovation, performance, risk taking, and pro-activeness) and the
dependent variable (entrepreneurial orientation).
The study supports the three hypotheses:
Hypothesis 1: There is a strong correlation between entrepreneurial orientation and
innovativeness amongst middle-level managers within organisations.
Hypothesis 2: Middle-level managers perceive that there is a strong relationship
between entrepreneurial orientation and organisational performance.
Hypothesis 3: There is a strong correlation between middle-level managers who
incorporates risk taking and pro-activeness within their organisations, and
entrepreneurial orientation.
5.4 Implications for the telecommunications industry
The findings of this research have various implications for the telecommunications
industry within South Africa; 1) to ensure that the telecommunications industry has
the relevant internal innovation strategies in place to drive innovation amongst
middle-level managers, 2) to ensure that their firms‟ key focus is to drive
entrepreneurial orientation initiatives that will ensure that firm‟s performance
increase, 3) to implement strategies that allow middle-level managers to be free to
118
take calculated risks and be pro-active to create a culture of Corporate
Entrepreneurship.
Regulation also needs to be adopted to ensure and assist the telecommunications
industry to develop Corporate Entrepreneurship strategies within their firms. The
driver for pro-entrepreneurship within the telecommunications industry is senior
executives within these firms. Top-level executives must implement strategies that
will create a culture of entrepreneurship within their organisations and ensure that it
is implemented by middle-level managers.
The regulator can assist telecommunications industry by:
Assisting the telecommunications industry with support in how to implement
Corporate Entrepreneurship initiatives
Creating a reward system for firms that successfully implement Corporate
Entrepreneurship strategies
Providing cost saving incentives for the industry (e.g. lower mobile
terminations rates for companies that ensure that Corporate Entrepreneurship
initiatives are part of its vision and key strategic objective).
Investing in the development of new technology and infrastructure
development.
The telecommunications industry has low levels of strategic regulatory factors
present in South Africa. The telecommunications industry is viewed as a critical
component in driving growth within South Africa; an ideal would be to drive growth
through entrepreneurship.
119
5.5 Limitations of this study
The research will be limited to telecommunications companies in South Africa with
the focus on middle-level managers. The South African context of the study limits the
generalizability of the research findings. This study will only focus on the impact of
middle-level management on the Corporate Entrepreneurial strategies within the
telecommunications industry. It will exclude other employees that do have an impact
on the Corporate Entrepreneurial strategy.
The results of this study cannot be used outside of South Africa; the study is limited
to South Africa and should not be generalised to other telecommunications
companies outside of South Africa. The disadvantage of the methodological strategy
is that the sample of the online questionnaires taken should have comprised a very
large sample, there was no guarantee in getting all respondents to complete the
online questionnaire and the quality of the answers may not be absolutely accurate.
The study used a quantitative research method, positivism, observations may involve
error and the theory can be modified, and reality cannot be known with certainty.
5.6 Recommendations for future research
Future studies should investigate the measured variables in countries outside of
South Africa and a wider area of business sectors. Future research should also
explore the causal relationship between entrepreneurial orientation and job
satisfaction amongst middle-level managers within the telecommunications industry.
The study did not specify the impact of culture amongst middle-level managers and
the impact culture has on their entrepreneurial orientation. South Africa has a rich
120
cultural diversity and this provides an opportunity to do research on the impact of
cultural diversity on Corporate Entrepreneurship.
Broad Based Black Economic Empowerment (BBBEE) is a key policy of government
to ensure the participation of all races within the South African economy. Future
research could focus on the important relationship between Corporate
Entrepreneurship and BBBEE, and how companies can use Corporate
Entrepreneurship to embrace BBBEE.
This study focused on the role of middle-level managers on Corporate
Entrepreneurship within the telecommunications industry. Future research can focus
on all three levels of management (top-level management, middle-level
management, and lower-level management), or focus on top-level or lower-level
managers.
The research did not focus on the impact of regulation on the implementation of
Corporate Entrepreneurship strategies within the telecommunications industry. The
impact of regulation on Corporate Entrepreneurship within the telecommunications
industry should be explored further.
121
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APPENDIX A
ACTUAL RESEARCH INSTRUMENT
Corporate Entrepreneurship: The role of middle-level management on
Corporate Entrepreneurship within the Telecommunications Industry in South
Africa.
Entrepreneurs play an important role in any economy, taking active roles in the
creation of employment and employment opportunities in many countries. Some
researchers see Corporate Entrepreneurship as embodying entrepreneurial
behaviour requiring organisational sanctions and resource commitments for the
purpose of developing different types of value-creating innovations (Alterowitz, 1988;
Jennings and Young, 1990).
Please take a few minutes to complete this survey which is part of an academic
research study. Your answers will be completely anonymous and confidential.
All the questions in the survey relate to Corporate Entrepreneurship within the
telecommunication industry.
How many years have you been employed by the organisation?
o 3 years or less
o 4-6 years
o 7-9 years
o 10 years or more
What is your gender?
o Male
o Female
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What is your highest level of education?
o Matric
o National Diploma
o Bachelor Degree
o Honours Degree
o Master Degree
o Doctorate Degree
o Other
In which geographical location are you based?
o Gauteng
o Cape Town
o Pretoria
o Port Elizabeth
o KZN
Which business area of the organisation do you work in?
o Finance
o Human Resources
o IT / Networks / Operations
o Product & Services
o Other (Please specify) ______________________
Please indicate to what extent you agree with the following statements using
the rating scale: (1) Strongly disagree, (2) Disagree, (3) Somewhat disagree, (4)
Neither agree nor disagree, (5) Somewhat agree, (6) Agree, (7) Strongly agree
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1. I have a clear sense of the future of my organisation
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
2. I feel comfortable with organisational changes in my company
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
3. My organisation has a clear Corporate Entrepreneurship strategy
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
4. My company‟s top-level management has the capability and capacity to
implement the corporate entrepreneurial strategy of the firm
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
5. New technological advancements create a challenge for my organisation
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
6. Changes in the competitive environment (telecommunications industry)
negatively impacts my organisation
1 2 3 4 5 6 7
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Strongly Disagree Strongly Agree
7. New products often require application of novel technologies
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
8. I play an important role in the implementation of the corporate entrepreneurial
strategy
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
9. The organisational environment allow all employees to be innovative and
creative
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
10. There is a correlation between employee performance and entrepreneurial
behaviour within our organisation
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
11. I encourage employees to be pro-active and allow them to take risks with
product or process development
1 2 3 4 5 6 7
134
Strongly Disagree Strongly Agree
12. I play an important role in the implementation of the corporate entrepreneurial
strategy of our organisation
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
13. I do play an important role in communicating the corporate entrepreneurial
strategy between top-level managers and operational-level managers
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
14. Entrepreneurial behaviour is part of the corporate culture within our
organisation
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
15. Middle-level managers within my organisation have much to do with how
entrepreneurial initiatives take shape
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
16. I support creativity and experimentation in introducing new products /
services, technological leadership and research and development in
developing new processes
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1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
17. Innovativeness allows our organisation to be ahead of competitors, “ahead of
the pack”
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
18. Managers at all levels of the organisation has a clear understanding of the
corporate entrepreneurial strategy of the firm
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
19. Employees are appropriately rewarded for the successful implementation of
new products / services or processes
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
20. I propose and interpret entrepreneurial opportunities within my organisation
that increase the firm‟s competitiveness
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
21. My organisation tolerates failures from entrepreneurial initiatives, and
provides decision-making latitude
1 2 3 4 5 6 7
136
Strongly Disagree Strongly Agree
22. I have or was part of a new initiative that was implemented in our organisation
over the last six months
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
23. I do moderate the relationship between work discretion and the number of
new ideas generated
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
24. The implementation of corporate entrepreneurial strategies has improved the
overall performance of my organisation
1 2 3 4 5 6 7
Strongly Disagree Strongly Agree
137
APPENDIX B
Respondents’ Snapshot
138
APPENDIX C
CONSISTENCY MATRIX
Research problem
The study will assess the role of middle level management on Corporate
Entrepreneurship within the telecommunications industry in South Africa. Empirical
research in this area has been explored in the past; this research will focus on recent
research exploring additional factors that have an impact on Corporate
Entrepreneurship from a middle level management perspective. Quinn (1985) was
among the first to recognise the valuable contributions and important roles of middle-
level managers in the innovation process in an established company.
Purpose of the research study
The purpose of this study is to evaluate the role of middle-level managers on
Corporate Entrepreneurship within the telecommunications industry within South
Africa. The South African telecommunications industry has seen exponential growth
over the last 24 years, especially within the cell phone industry (benefitting from the
technological enhancements worldwide during the mid-nineties and early 2000‟s),
(Makhaya, G, Roberts, R, 2003). There has been a strong correlation between the
technological developments and entrepreneurship especially within Sillicon Valley
(e.g. Apple and Microsoft). These entrepreneurial developments had an impact on
South Africa, especially within the telecommunications industry.
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Research Hypothesis Description of path Outcome
H1
A positive correlation exists
between innovation within
the telecommunications
industry and
entrepreneurial orientation
(EO).
EO Telecommunications
industry innovation
Supported
H2
A positive correlation exists
between organisational
performance within the
telecommunications
industry and
entrepreneurial orientation
(EO).
EO organisational
performance within the
telecommunications
industry
Supported
140
H3
A positive correlation exist
between risk taking and
entrepreneurial orientation
(EO)
A positive correlation exist
between pro-activeness
and entrepreneurial
orientation (EO)
EO risk taking within the
telecommunications
industry
EO pro-activeness
within the
telecommunications
industry
Supported
Supported
141
APPENDIX D
Responded Companies
Company Name
Vodacom
MTN
Cell C
Telkom SA
Neotel
Vumatel
Internet Solutions